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, 2000

                         Commission File Number 0-13823

                                  ------------


                                    FNB CORP.
             (Exact name of Registrant as specified in its charter)


     North Carolina                                      56-1456589
(State of incorporation)                   (I.R.S. Employer Identification No.)


                101 Sunset Avenue, Asheboro, North Carolina 27203
                    (Address of principal executive offices)


                                 (336) 626-8300
              (Registrant's telephone number, including area code)


                Securities pursuant to Section 12(g) of the Act:

                     Common Stock, par value $2.50 per share
                                (Title of Class)



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 [X] No [ ]

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 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. [X]
<PAGE>

As of March 22, 2001, the Registrant had 5,065,942 shares of $2.50 par value
common stock outstanding. The aggregate market value of voting stock held by
nonaffiliates of the Registrant, assuming, without admission, that all directors
and officers of the Registrant may be deemed affiliates, was $56,730,000.

Portions of the Proxy Statement of the Registrant for the Annual Meeting of
Shareholders to be held on May 8, 2001 are incorporated by reference in Part III
of this report.

<PAGE>
<TABLE>
<CAPTION>


                              CROSS REFERENCE INDEX


                                                                                            Page
                                                                                            ----
<S>                 <C>                                                                      <C>
Part I        Item 1       Business

              Item 2       Properties

              Item 3       Legal Proceedings
                           Not applicable.

              Item 4       Submission of Matters to a Vote of Security Holders
                           Not applicable.

Part II       Item 5       Market for the Registrant's Common Equity and Related
                           Stockholder Matters

              Item 6       Selected Financial Data

              Item 7       Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

              Item 7A      Quantitative and Qualitative Disclosures about Market Risk

              Item 8       Financial Statements and Supplementary Data
                           Independent Auditors' Report

                           Consolidated Balance Sheets at December 31, 2000 and 1999

                           Consolidated Statements of Income for each of the years in the
                           three-year period ended December 31, 2000

                           Consolidated Statements of  Shareholders' Equity and
                           Comprehensive Income for each of the years in the three-year
                           period ended December 31, 2000

                           Consolidated Statements of Cash Flows for each of the years
                           in the three-year period ended December 31, 2000

                           Notes to Consolidated Financial Statements

                           Quarterly Financial Data for 2000 and 1999

              Item 9       Changes in and Disagreements with Accountants on Accounting
                           and Financial Disclosure

                           Not applicable.

<PAGE>

<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                 <C>                                                                      <C>
Part III     Item 10     Directors and Executive Officers of the Registrant                    *
             Item 11     Executive Compensation                                                *

             Item 12     Security Ownership of Certain Beneficial Owners and Management        *

             Item 13     Certain Relationships and Related Transactions                        *

Part IV      Item 14     Exhibits, Financial Statement Schedules, and Reports on Form 8-K
                        (a)(1) Financial Statements (See Item 8 for reference).
                           (2) Financial Statement Schedules normally required on Form 10-K
                               are omitted since they are not applicable.
                           (3) Exhibits have been filed separately with the Commission and
                               are available upon written request.
                        (b)    Reports on Form 8-K (None were filed during the last
                               quarter of the period covered by this Form 10-K).
</TABLE>
-------------
*    Information called for by Part III is incorporated herein by reference to
     portions of the Registrant's Proxy Statement for the 2001 Annual Meeting of
     Shareholders, as follows:

          Item 10 - See information that appears under the headings "Election of
          Directors" and "Executive Officers".

          Item 11 - See information that appears under the heading "Executive
          Compensation".

          Item 12 - See information that appears under the headings "Voting
          Securities Outstanding and Principal Shareholders" and "Security
          Ownership of Management".

          Item 13 - See information that appears under the heading "Indebtedness
          of Officers and Directors".



<PAGE>


                                    BUSINESS

General

         FNB Corp. (the "Parent Company") is a bank holding company incorporated
under the laws of the State of North Carolina in 1984. On July 2, 1985, through
an exchange of stock, the Parent Company acquired its wholly-owned bank
subsidiary, First National Bank and Trust Company (the "Bank"), a national
banking association founded in 1907. The Parent Company and the Bank are
collectively referred to as the "Corporation".

         The Bank, a full-service commercial bank, currently conducts all of its
operations in Chatham, Montgomery, Moore, Randolph, Richmond and Scotland
counties in North Carolina. Four offices, including the main office, are located
in Asheboro. Additional community offices are located in Archdale (two offices),
Biscoe, Ellerbe, Laurinburg, Ramseur, Randleman, Rockingham (two offices),
Seagrove, Siler City, Southern Pines and Trinity. Some of the major banking
services offered include regular checking accounts, interest checking accounts
(including package account versions that offer a variety of products and
services), money market accounts, savings accounts, certificates of deposit,
holiday club accounts, individual retirement accounts, debit cards, credit cards
and loans, both secured and unsecured, for business, agricultural and personal
use. Other services offered include internet banking, cash management,
investment and trust services. The Bank also has automated teller machines and
is a member of Plus, a national teller machine network, and Star, a regional
network.

         On April 10, 2000, the Corporation completed a merger for the
acquisition of Carolina Fincorp, Inc. ("Carolina Fincorp"), holding company for
Richmond Savings Bank, Inc., SSB ("Richmond Savings"), headquartered in
Rockingham, North Carolina, in a transaction accounted for as a pooling of
interests. Pursuant to the terms of the merger, each share of Carolina Fincorp
common stock was converted into .79 of a share of FNB Corp. common stock, for a
total issuance of 1,478,398 FNB Corp. shares. On June 26, 2000, Richmond Savings
was merged into First National Bank and Trust Company. At March 31, 2000,
Carolina Fincorp operated five offices through Richmond Savings and had
approximately $125,943,000 in total assets, $108,848,000 in deposits and
$16,332,000 in shareholders' equity. Merger-related expenses of $2,796,000 were
recorded in the second quarter of 2000. Upon the change in control, the Carolina
Fincorp ESOP plan terminated according to its terms and unvested MRP shares
became fully vested. Included in merger-related expenses were $385,000 of
expense related to the termination of these plans. Additionally, approximately
$450,000 of the total provision for loan losses of $835,000 in the second
quarter was related to aligning the credit risk methodologies of FNB Corp. and
Carolina Fincorp. Historical financial information included in the consolidated
financial statements has been restated to include the account balances and
results of operations of Carolina Fincorp.

         In connection with the merger of the Bank with Richmond Savings, the
Bank acquired a financial subsidiary, Richmond Investment Services, Inc., which
changed its name after the acquisition to First National Investor Services, Inc.
This financial subsidiary acts as an agent in the sale of annuities, Medicare
and Medicaid supplements, and major medical and life insurance policies. It also
provides investment brokerage services.

         Prior to March 26, 1999, the Bank's data processing, item capture and
statement rendering operations were outsourced under a service bureau
arrangement. Commencing in the 1998 fourth quarter, the Bank began the process
of converting these operations to an in-house basis. Conversion to the
replacement systems occurred on March 26, 1999. Richmond Savings, however, was
on a service bureau arrangement until its merger into the Bank on June 26, 2000.
The total capital expenditure outlay for hardware and software amounted to
approximately $1,700,000, of which approximately one-half was

<PAGE>


recorded in 1998 and the remainder in 1999. In addition to capital expenditures
for the new system, the Bank incurred certain expenses in 1998, totaling
approximately $302,000, related to deconversion from the prior arrangement.

         In the 1998 fourth quarter, the Bank received regulatory approval for
establishment of a new branch office in Trinity, North Carolina. Construction of
the permanent Trinity facility is expected to be complete in 2001, resulting in
a total capital outlay of approximately $1,000,000, of which approximately
one-third was recorded in 1998 related to the purchase of land. Prior to
completion of the permanent facility, a temporary mobile office, which opened in
August 1999, is being operated at this site.

         In the 2000 fourth quarter, management adopted a balance sheet
restructuring project to reduce the level of lower yielding, 1-4 family
residential mortgage loans by selling those loans and redeploying the funds in
other types of assets, including specific purchases of bank owned life insurance
and a more general redeployment to other loan programs and investment
securities. 1-4 family residential mortgage loans totaling $20,938,000 were
transferred to loans held for sale, and of that amount, $12,199,000 were sold in
2000 and the remainder were sold in the first quarter of 2001. In December 2000,
single premium purchases of life insurance amounting to $10,000,000 were
recorded as bank owned life insurance in other assets on the consolidated
balance sheet. Income relating to the cash surrender value of the bank owned
life insurance will be recorded as noninterest income, while the loans sold had
generated interest income. The effective reduction of interest income will tend
to lower the net yield on earning assets and net interest spread in future
periods. Management believes that the income resulting from the bank owned life
insurance, which is not subject to income tax, will produce a greater
contribution to net income than did the income from the loans sold.

Competition

         The commercial banking industry within the Bank's marketing area is
extremely competitive. The Bank faces direct competition in Chatham, Montgomery,
Moore, Randolph, Richmond and Scotland counties from approximately twenty-one
different financial institutions, including commercial banks, savings
institutions and credit unions. Although none of these entities is dominant, the
Bank considers itself one of the major financial institutions in the area in
terms of total assets and deposits. Further competition is provided by banks
located in adjoining counties, as well as other types of financial institutions
such as insurance companies, finance companies, pension funds and brokerage
houses and other money funds. The principal methods of competing in the
commercial banking industry are improving customer service through the quality
and range of services provided, improving cost efficiencies and pricing services
competitively.

Supervision and Regulation

         The following discussion sets forth a summary of some of the material
statutes and regulations applicable to FNB and its subsidiaries. Further
information is provided under the heading "Capital Adequacy" in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" below.
The summaries do not purport to be comprehensive. The regulatory framework is
intended primarily for the protection of depositors and not for the protection
of security holders.

         The Parent Company is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), and is registered
as such with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"). A bank holding company is required to file with the Federal
Reserve Board annual reports and other information regarding its

<PAGE>

business operations and those of its subsidiaries. It is also subject to
examination by the Federal Reserve Board and is required to obtain Federal
Reserve Board approval prior to acquiring, direct or indirect ownership or
control of more than five percent of the voting shares of any bank; acquiring
all or substantially all of the assets of any bank; or merging or consolidating
with any other bank holding company. In addition, the BHC Act prohibits a bank
holding company that does not qualify as a financial holding company under the
Gramm-Leach-Bliley Financial Services Modernization Act of 1999 ("GLB Act"), as
more fully discussed below, from engaging in activities other than banking,
managing, or controlling banks or other permissible subsidiaries; and acquiring
or retaining direct or indirect control of any company engaged in any activities
determined by the Federal Reserve Board to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.

         In determining whether a particular activity is permissible, the
Federal Reserve Board considers whether the performance of such an activity
reasonably can be expected to produce benefits to the public that outweigh
possible adverse effects. Possible benefits the Federal Reserve Board considers
include greater convenience, increased competition, or gains in efficiency.
Possible adverse effects include undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices.
Activities that the Federal Reserve Board has permitted for bank holding
companies include: (1) making, acquiring or servicing loans or other extensions
of credit such as consumer finance, credit card, mortgage, commercial finance
and factoring companies would make; (2) acting as an investment or financial
advisor; (3) leasing real or personal property or acting as agent, broker, or
advisor in leasing such property if the lease is to serve as the functional
equivalent of an extension of credit to the lessee of the property and certain
other conditions are met; (4) providing bookkeeping or data processing services
under certain circumstances; (5) acting as an insurance agent or broker with
respect to insurance that is directly related to the extension of credit with
other financial services; (6) acting as an underwriter for credit life insurance
and credit accident and health insurance directly related to extensions of
credit by the holding company system; and (7) providing securities brokerage
services and related securities credit activities.

         As a national banking association, the Bank is subject to regulatory
supervision, of which regular bank examinations by the Comptroller of the
Currency are a part. The Bank is a member of the Federal Deposit Insurance
Corporation (the "FDIC"), which currently insures the deposits of each member
bank to a maximum of $100,000 per depositor. For this protection, each bank pays
a quarterly statutory assessment and is subject to the rules and regulations of
the FDIC. The Bank is also a member of the Federal Reserve System and is
therefore subject to the applicable provisions of the Federal Reserve Act, which
imposes restrictions on loans by subsidiary banks to a holding company and its
other subsidiaries and on the use of stock or securities as collateral security
for loans by subsidiary banks to any borrower.

         The GLB Act, signed into law in November 1999, establishes a
comprehensive framework to permit affiliations among commercial banks, insurance
companies, securities firms and other financial service providers. The GLB Act
allows bank holding companies meeting management, capital and Community
Reinvestment Act standards to engage in a substantially broader range of
nonbanking activities than was permissible prior to enactment, including
insurance underwriting and making merchant banking investments in commercial and
financial companies; allows insurers and other financial services companies to
acquire banks; removes various restrictions that applied to bank holding
ownership of securities firms and mutual fund advisory companies; and
establishes the overall regulatory structure applicable to bank holding
companies that also engage in insurance and securities operations. The act also
broadens the activities that may be conducted by national banks, banking
subsidiaries of bank holding companies and their financial subsidiaries and
provides an enhanced framework for protecting the privacy of consumer
information. In addition and in a change from prior law, bank

<PAGE>

holding companies will be in a position to be owned, controlled or acquired by
any company engaged in financially related activities.

         The ability of the Parent Company to pay dividends depends to a large
extent upon the amount of dividends the Bank pays to the Parent Company.
Approval of the Comptroller of the Currency, or his designate, will be required
for any dividend to the Parent Company by the Bank if the total of all
dividends, including any proposed dividend, declared by the Bank in any calendar
year exceeds the total of its net profits for that year combined with its
retained net profits for the preceding two years, less any required transfers to
surplus or a fund for the retirement of any preferred stock.

Effect of Governmental Policies

         The operations and earnings of the Bank and, therefore, of the Parent
Company are affected by legislative changes and by the policies of various
regulatory agencies. In particular, the Bank is affected by the monetary and
fiscal policies of the Federal Reserve Board. The instruments of monetary policy
used by the Federal Reserve Board include its open market operations in U.S.
Government securities, changes in the discount rate on member bank borrowings,
and changes in reserve requirements on member bank deposits. The actions of the
Federal Reserve Board influence the growth of bank loans, investments and
deposits and also affect interest rates charged on loans or paid on deposits.

Employees

         As of December 31, 2000, the Parent Company had three officers, all of
whom were also officers of the Bank. On that same date, the Bank had 187
full-time employees and 23 part-time employees. The Bank considers its
relationship with its employees to be excellent. The Bank provides employee
benefit programs, including a noncontributory defined benefit pension plan,
matching retirement/savings (401(k)) plan, group life, health and dental
insurance, paid vacations, sick leave, and health care and life insurance
benefits for retired employees.

Properties

         The main offices of the Bank and the principal executive offices of the
Parent Company are located in an office building at 101 Sunset Avenue, Asheboro,
North Carolina. The premises contain approximately 36,500 square feet of office
space. The Bank also has other community offices in Asheboro (three offices),
Archdale (two offices), Biscoe, Ellerbe, Laurinburg, Ramseur, Randleman,
Rockingham (two offices), Seagrove, Siler City, Southern Pines and Trinity,
North Carolina. Except as noted below, all premises are owned by the Bank in
fee. The Randolph Mall office in Asheboro is under a lease expiring January 31,
2002. The Bush Hill office in Archdale is under a lease expiring January 31,
2002, with lease renewal options for up to an additional 20-year term. The
Laurinburg office is under a lease expiring February 28, 2002. The land on which
the Seagrove office is situated is under a lease expiring June 30, 2016. At that
time, the land is subject to a purchase option at a fixed price or lease renewal
options for up to an additional 30-year term.

<PAGE>
                            FNB CORP. AND SUBSIDIARY

                         FIVE YEAR FINANCIAL HISTORY (1)

<TABLE>
<CAPTION>
                                   2000         1999        1998        1997        1996
                                 --------     --------    --------    --------    --------
                                       (dollars in thousands, except per share data)
<S>                              <C>          <C>         <C>         <C>         <C>
Summary of Operations
Interest income                  $ 41,936     $ 35,822    $ 35,111    $ 32,242    $ 29,142
Interest expense                   20,908       16,203      15,713      14,463      13,561
                                 --------     --------    --------    --------    --------
Net interest income                21,028       19,619      19,398      17,779      15,581
Provision for loan losses           1,802          511         482         670         526
                                 --------     --------    --------    --------    --------
Net interest income after
  provision for loan losses        19,226       19,108      18,916      17,109      15,055
Noninterest income                  4,501        4,068       3,756       3,346       2,918
Noninterest expense                18,497       15,082      14,473      13,382      11,570
                                 --------     --------    --------    --------    --------
Income before income taxes          5,230        8,094       8,199       7,073       6,403
Income taxes                        1,714        2,504       2,568       2,220       1,975
                                 --------     --------    --------    --------    --------
Net income                       $  3,516     $  5,590    $  5,631    $  4,853    $  4,428
                                 ========     ========    ========    ========    ========

Per Share Data (2,3)
Net income:
  Basic                          $    .70     $   1.11    $   1.12    $   1.08    $   1.23
  Diluted                             .69         1.09        1.09        1.07        1.22
Cash dividends declared (4)           .51          .51         .45         .38         .33
Book value                          10.89        10.13        9.76       11.24       10.35

Balance Sheet Information
Total assets                     $565,639     $517,468    $472,188    $437,743    $401,909
Investment securities             132,384      119,786     121,471     112,278     107,412
Loans                             395,737      360,840     314,839     296,525     264,020
Deposits                          472,448      427,010     400,218     365,349     356,230
Shareholders' equity               55,122       52,068      50,390      57,349      37,408

Ratios (Averages)
Return on assets                      .65%        1.15%       1.23%       1.16%       1.15%
Return on shareholders' equity       6.59        10.85        9.55        9.78       12.34
Shareholders' equity to assets       9.86        10.57       12.88       11.86        9.34
Dividend payout ratio               76.05        40.88       36.71       29.86       26.87
Loans to deposits                   84.79        80.63       80.36       77.71       75.93
Net yield on earning assets,
  taxable equivalent basis           4.28         4.48        4.71        4.72        4.52
-----------------
(1)  Financial data for all periods has been restated to reflect the merger with
     Carolina Fincorp, Inc., which became effective on April 10, 2000 and was
     accounted for as a pooling of interests.
(2)  All per share data has been retroactively adjusted to reflect the FNB Corp.
     two-for-one stock split effected in the form of a 100% stock dividend paid
     in the first quarter of 1998.
(3)  FNB Corp. historical shares were used for 1996 as Carolina Fincorp, Inc.
     had no shares outstanding.
(4)  Cash dividends declared represent FNB Corp. historical cash dividends
     declared.
</TABLE>

<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations

         The purpose of this discussion and analysis is to assist in the
understanding and evaluation of the financial condition, changes in financial
condition and results of operations of FNB Corp. (the "Parent Company") and its
wholly-owned subsidiary, First National Bank and Trust Company (the "Bank"),
collectively referred to as the "Corporation". This discussion should be read in
conjunction with the consolidated financial statements and supplemental
financial information appearing elsewhere in this report.

Overview

         On April 10, 2000, the Corporation completed a merger for the
acquisition of Carolina Fincorp, Inc. ("Carolina Fincorp"), holding company for
Richmond Savings Bank, Inc., SSB ("Richmond Savings"), headquartered in
Rockingham, North Carolina, in a transaction accounted for as a pooling of
interests. Pursuant to the terms of the merger, each share of Carolina Fincorp
common stock was converted into .79 of a share of FNB Corp. common stock, for a
total issuance of 1,478,398 FNB Corp. shares. On June 26, 2000, Richmond Savings
was merged into First National Bank and Trust Company. At March 31, 2000,
Carolina Fincorp operated five offices through Richmond Savings and had
approximately $125,943,000 in total assets, $108,848,000 in deposits and
$16,332,000 in shareholders' equity. Merger-related expenses of $2,796,000 were
recorded in the second quarter of 2000. Upon the change in control, the Carolina
Fincorp ESOP plan terminated according to its terms and unvested MRP shares
became fully vested. Included in merger-related expenses were $385,000 of
expense related to the termination of these plans. Additionally, approximately
$450,000 of the total provision for loan losses of $835,000 in the second
quarter was related to aligning the credit risk methodologies of FNB Corp. and
Carolina Fincorp. Historical financial information included in the consolidated
financial statements has been restated to include the account balances and
results of operations of Carolina Fincorp.

         The Corporation earned $3,516,000 in 2000, a 37.1% decrease in net
income from 1999. Basic earnings per share decreased from $1.11 in 1999 to $.70
in 2000 and diluted earnings per share decreased from $1.09 to $.69. Total
assets were $565,639,000 at December 31, 2000, up 9.3% from year-end 1999. Loans
amounted to $395,737,000 at December 31, 2000, up 9.7% from the prior year.
Total deposits grew 10.6% to $472,448,000 in 2000.

         Excluding $2,338,000 in after-tax charges associated with the merger,
which includes the $450,000 provision for loan losses discussed above, net
income for 2000 amounted to $5,854,000, a 4.7% increase over 1999, with basic
and diluted earnings per share amounts of $1.16 and $1.15, respectively.

Earnings Review

         After exclusion of after-tax, merger-related charges of $2,338,000
recorded in the second quarter of 2000 and associated with the merger with
Carolina Fincorp as discussed in the "Overview", the Corporation's net income
increased $264,000 in 2000, up 4.7% over 1999. Earnings were positively impacted
in 2000 by increases of $1,409,000 or 7.2% in net interest income and $433,000
in noninterest income. These gains were significantly offset, however, by an
increase of $619,000 in noninterest expense and by an increase of $841,000 in
the provision for loan losses, excluding merger-related charges. Results for
2000 were negatively affected by a special group medical insurance assessment of
$176,000 recorded in the second quarter, the effect of which was only partially
offset by a $76,000 gain on the sale of an investment recorded in the same
quarter.

         The Corporation's net income decreased $41,000 in 1999, down 0.7% from
1998. Earnings were positively impacted in 1999 by increases of $221,000 or 1.1%
in net interest income and $312,000 in noninterest income. These gains were more
than offset, however, by an increase of $609,000 in noninterest expense and by
an increase of $29,000 in the provision for loan losses. Special noninterest
expense charges, relating to a major data processing conversion, significantly
affected the 1998 fourth quarter operating results,

<PAGE>

such charges amounting to $302,000 during that period, and to a lesser extent
affected the 1999 operating results, especially in the first quarter.

         Excluding the merger-related charges, return on average assets declined
from 1.23% in 1998 to 1.15% in 1999 to 1.08% in 2000. Return on average
shareholders' equity improved from 9.55% in 1988 to 10.85% in 1999 to 10.97% in
2000. Including the effect of the merger-related charges, return on average
assets was .65% in 2000 and return on average shareholders' equity was 6.59%.

<PAGE>

Net Interest Income

         Net interest income is the difference between interest income,
principally from loans and investments, and interest expense, principally on
customer deposits. Changes in net interest income result from changes in
interest rates and in the volume, or average dollar level, and mix of earning
assets and interest-bearing liabilities.

         Net interest income was $21,028,000 in 2000 compared to $19,619,000 in
1999. The increase of $1,409,000 or 7.2% resulted primarily from a 11.7%
increase in the level of average earning assets, the effect of which was
partially offset by a decline in the net yield on earning assets, or net
interest margin, from 4.48% in 1999 to 4.28% in 2000. In 1999, there was a
$221,000 or 1.1% increase in net interest income reflecting a 6.5% increase in
average earning assets, the effect of which was largely offset by a decline in
the net interest margin from 4.71% in 1998. On a taxable equivalent basis, the
increases in net interest income in 2000 and 1999 were $1,377,000 and $271,000,
respectively, reflecting changes in the relative mix of taxable and non-taxable
earning assets in each year.

         Table 1 sets forth for the periods indicated information with respect
to the Corporation's average balances of assets and liabilities, as well as the
total dollar amounts of interest income (taxable equivalent basis) from earning
assets and interest expense on interest-bearing liabilities, resultant rates
earned or paid, net interest income, net interest spread and net yield on
earning assets. Net interest spread refers to the difference between the average
yield on earning assets and the average rate paid on interest-bearing
liabilities. Net yield on earning assets, or net interest margin, refers to net
interest income divided by average earning assets and is influenced by the level
and relative mix of earning assets and interest-bearing liabilities.

<PAGE>

Table 1
Average Balances and Net Interest Income Analysis

<TABLE>
<CAPTION>
                                                              2000                                    1999
                                             --------------------------------------  --------------------------------------
                                             Average     Interest     Average Rates  Average     Interest     Average Rates
                                             Balance  Income/Expense   Earned/Paid   Balance  Income/Expense   Earned/Paid
                                             -------  --------------   -----------   -------  --------------   -----------
                                                            (taxable equivalent basis, dollars in thousands)
<S>                                          <C>         <C>               <C>       <C>         <C>               <C>
EARNING ASSETS
Loans (1) (2)                                $385,299    $ 34,296          8.88%     $328,450      $ 28,016        8.53%
Investment securities (1):
   Taxable income                             103,636       6,772          6.53       104,438         6,893        6.60
   Non-taxable income                          19,684       1,508          7.66        19,832         1,537        7.75
Other earning assets                            6,296         383          6.06         8,446           431        5.10
                                              -------      ------          ----       -------        ------        ----
         Total earning assets                 514,915      42,959          8.33       461,166        36,877        8.00
                                              -------      ------          ----       -------        ------        ----

Cash and due from banks                        13,955                                  14,371
Other assets, net                              11,968                                  11,895
                                             --------                                --------
         TOTAL ASSETS                        $540,838                                $487,432
                                             ========                                ========

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
   Demand deposits                           $ 57,332         907          1.58      $ 55,129           826        1.50
   Savings deposits                            35,844         827          2.30        37,571           849        2.26
   Money market deposits                       34,798       1,463          4.19        31,839         1,154        3.62
   Certificates and other time deposits       279,586      16,304          5.82       239,289        12,354        5.16
Retail repurchase agreements                   11,091         516          4.64        12,971           501        3.87
Federal Home Loan Bank advances                15,178         819          5.38         8,567           433        5.05
Other borrowed funds                            1,112          72          6.47         1,616            86        5.30
                                              -------      ------          ----       -------        ------        ----
         Total interest-bearing liabilities   434,941      20,908          4.79       386,982        16,203        4.19
                                              -------      ------          ----       -------        ------        ----

Noninterest-bearing demand deposits            46,859                                  43,546
Other liabilities                               5,692                                   5,360
Shareholders' equity                           53,346                                  51,544
                                             --------                                --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $540,838                                $487,432
                                             ========                                ========

NET INTEREST INCOME AND SPREAD                           $ 22,051          3.54%                   $ 20,674        3.81%
                                                         ========          ====                    ========        ====

NET YIELD ON EARNING ASSETS                                                4.28%                                   4.48%
                                                                           ====                                    ====
</TABLE>

<TABLE>
<CAPTION>
                                                              1998
                                             -------------------------------------
                                             Average     Interest    Average Rates
                                             Balance  Income/Expense  Earned/Paid
                                             -------  --------------  -----------
<S>                                          <C>          <C>              <C>
EARNING ASSETS
Loans (1) (2)                                $307,613     $ 27,375         8.90%
Investment securities (1):
   Taxable income                              98,090        6,780         6.91
   Non-taxable income                          19,780        1,546         7.82
Other earning assets                            7,381          415         5.62
                                              -------       ------         ----
         Total earning assets                 432,864       36,116         8.34
                                              -------       ------         ----

Cash and due from banks                        13,200
Other assets, net                              11,938
                                             --------
         TOTAL ASSETS                        $458,002
                                             ========

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
   Demand deposits                           $ 51,179          894         1.75
   Savings deposits                            38,595          944         2.44
   Money market deposits                       25,430          977         3.84
   Certificates and other time deposits       226,914       12,411         5.47
Retail repurchase agreements                   10,169          444         4.37
Federal Home Loan Bank advances                    --           --           --
Other borrowed funds                              742           43         5.80
                                              -------       ------         ----
         Total interest-bearing liabilities   353,029       15,713         4.45
                                              -------       ------         ----

Noninterest-bearing demand deposits            40,697
Other liabilities                               5,304
Shareholders' equity                           58,972
                                             --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $458,002
                                             ========

NET INTEREST INCOME AND SPREAD                            $ 20,403        3.89%
                                                          ========        ====

NET YIELD ON EARNING ASSETS                                               4.71%
                                                                          ====

(1)  Interest income and yields related to certain investment securities and
     loans exempt from both federal and state income tax or from state income
     tax alone are stated on a fully taxable equivalent basis, assuming a 34%
     federal tax rate and applicable state tax rate, reduced by the
     nondeductible portion of interest expense.

(2)  Nonaccrual loans are included in the average loan balance. Loan fees and
     the incremental direct costs associated with making loans are deferred and
     subsequently recognized over the life of the loan as an adjustment of
     interest income.
</TABLE>
<PAGE>
         Changes in the net interest margin and net interest spread tend to
correlate with movements in the prime rate of interest. There are variations,
however, in the degree and timing of rate changes, compared to prime, for the
different types of earning assets and interest-bearing liabilities.

         The average prime rate of interest has remained in a fairly narrow band
in recent years, amounting to 9.21%, 7.99% and 8.37% in 2000, 1999 and 1998,
respectively. This situation has tended to create a degree of stability in the
interest rates both earned and paid by the Bank. Nonetheless, the actual level
of the prime rate has changed with some frequency as the Federal Reserve has
responded to various economic scenarios. After remaining unchanged in the first
three quarters of 1998, a significant change occurred in the level of the prime
rate during the last three months of that year when the Federal Reserve took
action in response to the downturn of the economies of certain Asian and Latin
American countries and the effects or potential effects of those downturns on
the U.S. economy. In rapid succession, three 25 basis point cuts were recorded
in the prime rate, lowering it from 8.50% to 7.75%. This decrease in the prime
rate, through the effect on the average yield on total earning assets, tended to
negatively impact the Corporation's net interest margin and net interest spread.

         Due to subsequent concern about inflationary pressures that appeared to
be building in the U. S. economy, the Federal Reserve elected to raise the level
of interest rates in the third and fourth quarters of 1999, resulting in three
25 basis point increases in the prime rate that raised it from 7.75% to 8.50%,
thereby effectively reversing the rate reductions that had occurred in 1998.
Continued concerns about possible inflationary pressures caused the Federal
Reserve to further raise the level of interest rates in the first six months of
2000, resulting in two additional 25 basis point increases and one 50 basis
point increase in the prime rate that raised it to the 9.50% level. While the
Corporation has tended to see some improvement in the average total yield on
earning assets due to the prime rate increases, the average rate paid on
interest-bearing liabilities has increased by a greater amount, which has
further negatively impacted the net interest margin and net interest spread.

         In 2000, the net interest spread declined by 27 basis points from 3.81%
in 1999 to 3.54% in 2000, reflecting the effect of an increase in the average
total yield on earning assets that was more than offset by an increase in the
average rate paid on interest-bearing liabilities, or cost of funds. The yield
on earning assets increased by 33 basis points from 8.00% in 1999 to 8.33% in
2000, while the cost of funds increased by 60 basis points in moving from 4.19%
to 4.79%. In 1999, the 8 basis points decrease in net interest spread resulted
from a 34 basis points decrease in the yield on earning assets as partially
offset by a 26 basis points decrease in the cost of funds.
<PAGE>
         The 2000 and 1999 changes in net interest income on a taxable
equivalent basis, as measured by volume and rate variances, are analyzed in
Table 2. Volume refers to the average dollar level of earning assets and
interest-bearing liabilities.

Table 2
Volume and Rate Variance Analysis

<TABLE>
<CAPTION>
                                                  2000 Versus 1999               1999 Versus 1998
                                           -----------------------------  --------------------------------
                                           Variance due to(1)             Variance due to(1)
                                           ------------------             ------------------
                                            Volume   Rate     Net Change   Volume   Rate     Net Change
                                           -------  -------   ----------  -------  -------   ----------
                                                    (taxable equivalent basis, in thousands)
<S>                                        <C>        <C>        <C>        <C>        <C>        <C>
Interest Income
  Loans (2)                                $ 5,077    $ 1,203    $ 6,280    $ 1,807    $(1,166)   $   641
  Investment securities (2):
    Taxable income                             (51)       (70)      (121)       426       (313)       113
    Non-taxable income                         (11)       (18)       (29)         4        (13)        (9)
  Other earning assets                        (121)        73        (48)        57        (41)        16
                                           -------    -------    -------    -------    -------    -------
         Total interest income               4,894      1,188      6,082      2,294     (1,533)       761
                                           -------    -------    -------    -------    -------    -------
Interest Expense
  Interest-bearing deposits:
    Demand deposits                             35         46         81         66       (134)       (68)
    Savings deposits                           (38)        16        (22)       (25)       (70)       (95)
    Money market deposits                      115        194        309        235        (58)       177
    Certificates and other time deposits     2,245      1,705      3,950        662       (719)       (57)
  Retail repurchase agreements                 (78)        93         15        112        (55)        57
  Federal Home Loan Bank advances              356         30        386        433         --        433
  Other borrowed funds                         (30)        16        (14)        47         (4)        43
                                           -------    -------    -------    -------    -------    -------
         Total interest expense              2,605      2,100      4,705      1,530     (1,040)       490
                                           -------    -------    -------    -------    -------    -------
Net Interest Income                        $ 2,289    $  (912)   $ 1,377    $   764    $  (493)   $   271
                                           =======    =======    =======    =======    =======    =======

(1)  The mix variance, not separately stated, has been proportionally allocated
     to the volume and rate variances based on their absolute dollar amount.

(2)  Interest income related to certain investment securities and loans exempt
     from both federal and state income tax or from state income tax alone is
     stated on a fully taxable equivalent basis, assuming a 34% federal tax rate
     and applicable state tax rate, reduced by the nondeductible portion of
     interest expense.
</TABLE>

<PAGE>
Provision for Loan Losses

         This provision is the charge against earnings to provide an allowance
or reserve for probable losses inherent in the loan portfolio. The amount of
each year's charge is affected by several considerations including management's
evaluation of various risk factors in determining the adequacy of the allowance
(see "Asset Quality"), actual loan loss experience and loan portfolio growth.
Earnings were negatively impacted in 2000 by a $1,802,000 provision for loan
losses compared to a $511,000 provision in 1999. Of the total 2000 provision,
$835,000 was recorded in the second quarter, which amount included approximately
$450,000 that was merger related as discussed below, while the remainder
resulted from additional loan writedowns and charge-offs taken in the same
quarter. The additional increase in the provision for 2000 was due to continued
loan growth, higher loan losses and uncertain economic conditions.

         The allowance for loan losses, as a percentage of loans outstanding and
reflecting the restatement of historical information for the merger, amounted to
1.13% at December 31, 2000, .91% at December 31, 1999 and .95% at December 31,
1998. The increase in the allowance percentage from December 31, 1999 to
December 31, 2000 resulted largely from the provision component of approximately
$450,000 for the second quarter of 2000 to align the credit risk methodologies
of FNB Corp. and Carolina Fincorp.

Noninterest Income

         Noninterest income increased $433,000 or 10.6% in 2000 and $312,000 or
8.3% in 1999, reflecting in part the general increase in the volume of business.
The increase in service charges on deposit accounts in 2000 was primarily due to
improved fee collection efforts in 2000, but also reflected the implementation
for a full year of the selected increases in service charge rates that became
effective in the 1999 first quarter. The 1999 increase in service charges on
deposit accounts primarily reflected the rate increases that became effective in
the 1999 first quarter. The decrease in annuity and brokerage commissions in
2000 related to a general decrease in both sales of annuity products and the
volume of brokerage services, while the opposite was true in 1999 when such
commissions increased. Other income was impacted in 2000 by a $76,000 gain on
the sale of an investment.

Noninterest Expense

         Excluding merger-related expenses of $2,796,000 recorded in the second
quarter of 2000, noninterest expense was $619,000 or 4.1% higher in 2000 due
largely to increased personnel expense and the continuing effects of inflation.
The level of noninterest expense was further affected by the opening of a new
branch office in August 1999 (see "Business Development Matters"). The
components of noninterest expense were affected by the major data processing
conversion completed in the first quarter of 1999, which conversion ultimately
resulted in a major reduction in the cost of data processing services provided
by outside processors. The cost of outside data processing services continued
for Richmond Savings until its merger into First National Bank and Trust Company
on June 26, 2000. Personnel expense was impacted by increased staffing
requirements, especially as related to the data processing conversion and to the
opening of the new branch office, and by normal salary adjustments. Personnel
expense was further negatively affected in 2000 by a special group medical
insurance assessment of $176,000 in the second quarter. Additionally, group
medical insurance rates were increased approximately 39% in the 2000 second
quarter. Furniture and equipment expense increased largely as a result of the
data processing conversion, especially for depreciation and maintenance charges.

         The major data processing conversion from a service bureau arrangement
to an in-house basis, completed on March 26, 1999 and discussed in "Business
Development Matters", significantly affected operating results for the 1999
first quarter. The cost of data processing services in the 1999 first quarter
was impacted by the higher rate charged by the service bureau on a
month-to-month basis, subsequent to the termination of the prior long-term
agreement in late 1998. Also, personnel expense was negatively affected by the
staffing and training requirements that were preliminary to the implementation
of the new system.

         Subsequent to the 1999 first quarter, the total cost related to data
processing operations on an in-house basis compares favorably to the cost that
was being experienced under the service bureau arrangement prior to the start of
the conversion

<PAGE>

process in the 1998 fourth quarter. Noninterest expense components are being
significantly affected, however, as there is a major decrease in the direct cost
of data processing services, but increases in the levels of personnel expense
and furniture and equipment expense.

         Noninterest expense was $609,000 or 4.2% higher in 1999 due largely to
increased personnel expense, the effect of a major data processing conversion
(as discussed above) and the continuing effects of inflation. The level of
noninterest expense was further affected by the opening of a new branch office
in August 1999, as noted above. Personnel expense was impacted by increased
staffing requirements, especially as related to the data processing conversion
and the opening of the new branch office, and by normal salary adjustments. Net
occupancy expense was affected by increased maintenance charges. Furniture and
equipment expense increased largely as a result of the data processing
conversion, especially for depreciation charges.

Merger-Related Expenses and Charges

         In connection with the merger acquisition of Carolina Fincorp,
merger-related expenses of $2,796,000 were recorded in the second quarter of
2000. Upon the change in control, the Carolina Fincorp ESOP plan terminated
according to its terms and unvested restricted stock plan shares became fully
vested, resulting in certain expenses considered merger-related. Other primary
components of merger-related expenses were professional fees, investment banking
fees, contract termination costs, data processing conversion fees and severance
payments. Additionally, approximately $450,000 of the total provision for loan
losses of $835,000 in the second quarter was related to aligning the credit risk
methodologies of FNB Corp. and Carolina Fincorp. The primary components of
merger-related expenses are summarized in Table 3.
--------------------------------------------------------------------------------

Table 3
Merger-Related Expenses

                                                                2000
                                                                ----
                                                           (in thousands)

    Professional fees                                          $  569
    Investment banking fees                                       558
    Contract termination costs                                    467
    ESOP and restricted stock
      plan termination costs                                      385
    Data processing conversion fees                               209
    Severance payments                                            161
    Other merger expenses                                         447
                                                               ------
         Total                                                 $2,796
                                                               ======
--------------------------------------------------------------------------------

Income Taxes

         The effective income tax rate increased from 30.9% in 1999 to 32.8% in
2000 due principally to the nondeductibility of certain merger-related expenses.
Reflecting a reduction in the state income tax rate, the effective income tax
rate declined from 31.3% in 1998 to 30.9% in 1999.

<PAGE>
Liquidity

         Liquidity refers to the continuing ability of the Bank to meet deposit
withdrawals, fund loan and capital expenditure commitments, maintain reserve
requirements, pay operating expenses and provide funds to the Parent Company for
payment of dividends, debt service and other operational requirements. Liquidity
is immediately available from five major sources: (a) cash on hand and on
deposit at other banks, (b) the outstanding balance of federal funds sold, (c)
lines for the purchase of federal funds from other banks, (d) the $67,800,000
line of credit established at the Federal Home Loan Bank, less existing advances
against that line, and (e) the available-for-sale securities portfolio. Further,
while available-for-sale securities are intended to be a source of immediate
liquidity, the entire investment securities portfolio is managed to provide both
income and a ready source of liquidity. All debt securities are of investment
grade quality and, if the need arises, can be promptly liquidated on the open
market or pledged as collateral for short-term borrowing.

         Consistent with its approach to liquidity, the Bank as a matter of
policy does not solicit or accept brokered deposits for funding asset growth.
Instead, loans and other assets are based primarily on a core of local deposits
and the Bank's capital position. To date, the steady increase in deposits,
retail repurchase agreements and capital, supplemented by Federal Home Loan Bank
advances, has been adequate to fund loan demand in the Bank's market area, while
maintaining the desired level of immediate liquidity and a substantial
investment securities portfolio available for both immediate and secondary
liquidity purposes.
<PAGE>
Asset/Liability Management and Interest Rate Sensitivity

         One of the primary objectives of asset/liability management is to
maximize net interest margin while minimizing the earnings risk associated with
changes in interest rates. One method used to manage interest rate sensitivity
is to measure, over various time periods, the interest rate sensitivity
positions, or gaps; however, this method addresses only the magnitude of timing
differences and does not address earnings or market value. Therefore, management
uses an earnings simulation model to prepare, on a regular basis, earnings
projections based on a range of interest rate scenarios in order to more
accurately measure interest rate risk.

         The Bank's balance sheet was liability-sensitive at December 31, 2000.
A liability-sensitive position means that in gap measurement periods of one year
or less there are more liabilities than assets subject to immediate repricing as
market rates change. Because immediately rate sensitive interest-bearing
liabilities exceed rate sensitive assets, the earnings position could improve in
a declining rate environment and could deteriorate in a rising rate environment,
depending on the correlation of rate changes in these two categories. Included
in interest-bearing liabilities subject to rate changes within 90 days is a
portion of the interest-bearing demand, savings and money market deposits. These
types of deposits historically have not repriced coincidentally with or in the
same proportion as general market indicators.

         Table 4 presents information about the periods in which the
interest-sensitive assets and liabilities at December 31, 2000 will either
mature or be subject to repricing in accordance with market rates, and the
resulting interest-sensitivity gaps. This table shows the sensitivity of the
balance sheet at one point in time and is not necessarily indicative of what the
sensitivity will be on other dates. As a simplifying assumption concerning
repricing behavior, 50% of the interest-bearing demand, savings and money market
deposits are assumed to reprice immediately and 50% are assumed to reprice
beyond one year.

<PAGE>

Table 4
Interest Rate Sensitivity Analysis

<TABLE>
<CAPTION>
                                                                    December 31, 2000
                                               --------------------------------------------------------
                                                    Rate Maturity In Days
                                               ------------------------------      Beyond
                                                 1-90     91-180      181-365     One Year       Total
                                               --------  --------   ---------    ---------     --------
                                                                (dollars in thousands)
Earning Assets
<S>                                            <C>       <C>        <C>          <C>           <C>
  Loans                                        $154,209  $ 16,352   $  29,335    $195,841      $395,737
  Investment securities                           2,830     2,008       3,746     123,800       132,384
                                               --------  --------   ---------    --------      --------
     Total earning assets                       157,039    18,360      33,081     319,641       528,121
                                               --------  --------   ---------    --------      --------
Interest-Bearing Liabilities
  Interest-bearing deposits:
    Demand deposits                              28,240         -           -      28,241        56,481
    Savings deposits                             17,220         -           -      17,221        34,441
    Money market deposits                        17,950         -           -      17,951        35,901
    Time deposits of $100,000 or more            43,060    18,884      26,760      12,880       101,584
    Other time deposits                          54,640    26,477      84,016      33,007       198,140
  Retail repurchase agreements                   11,201         -           -           -        11,201
  Federal Home Loan Bank advances                     -         -           -      15,000        15,000
  Federal funds purchased                         4,750         -           -           -         4,750
                                               --------  --------   ---------    --------      --------
     Total interest-bearing liabilities         177,061    45,361     110,776     124,300       457,498
                                               --------  --------   ---------    --------      --------
Interest Sensitivity Gap                       $(20,022) $(27,001)  $ (77,695)   $195,341      $ 70,623
                                               ========  ========   =========    ========      ========

Cumulative gap                                 $(20,022) $(47,023)  $(124,718)   $ 70,623      $ 70,623
Ratio of interest-sensitive assets to
  interest-sensitive liabilities                     89%       40%         30%        257%          115%
</TABLE>
<PAGE>
Market Risk

         Market risk reflects the risk of economic loss resulting from adverse
changes in market price and interest rates. This risk of loss can be reflected
in diminished current market values and/or reduced potential net interest income
in future periods.

         The Bank's market risk arises primarily from interest rate risk
inherent in its lending and deposit-taking activities. The structure of the
Bank's loan and deposit portfolios is such that a significant decline in
interest rates may adversely impact net market values and net interest income.
The Bank does not maintain a trading account nor is the Bank subject to currency
exchange risk or commodity price risk. Interest rate risk is monitored as part
of the Bank's asset/liability management function, which is discussed in
"Asset/Liability Management and Interest Rate Sensitivity" above.

         Table 5 presents information about the contractual maturities, average
interest rates and estimated fair values of financial instruments considered
market risk sensitive at December 31, 2000.

Table 5
Market Risk Analysis of Financial Instruments

<TABLE>
<CAPTION>
                                        Contractual Maturities at December 31, 2000
                           --------------------------------------------------------------------
                                                                             Beyond              Average   Estimated
                                                                              Five               Interest    Fair
                             2001      2002      2003      2004      2005     Years     Total    Rate (1)    Value
                           --------  --------  --------  --------  --------  --------  --------  --------  ---------
                                                                 (dollars in thousands)
<S>                        <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>      <C>
Financial Assets
  Debt securities (2)      $  8,590  $  2,131  $  8,974  $  7,723  $ 40,968  $ 61,578  $129,964   6.88%    $129,752
  Loans (3):
    Fixed rate               53,593    25,336    21,251    16,012    16,700    62,257   195,149   8.75      189,238
    Variable rate            63,989    27,730    29,419    16,392    14,265    48,793   200,588   9.08      200,812
  Federal funds sold              -         -         -         -         -         -        94   6.49           94
                           --------  --------  --------  --------  --------  --------  --------            --------
      Total                $126,172  $ 55,197  $ 59,644  $ 40,127  $ 71,933  $172,628  $525,795   8.41     $519,896
                           ========  ========  ========  ========  ========  ========  ========            ========
Financial Liabilities
  Interest-bearing
    demand deposits        $      -  $      -  $      -  $      -  $      -  $      -  $ 56,481   1.43     $ 56,481
  Savings deposits                -         -         -         -         -         -    34,441   1.99       34,441
  Money market
    deposits                      -         -         -         -         -         -    35,901   4.16       35,901
  Time deposits:
    Fixed rate              241,264    35,179     7,749     1,155     1,815         -   287,162   6.34      289,370
    Variable rate             7,644     3,884       945        85         4         -    12,562   5.83       12,562
  Retail repurchase
    agreements                    -         -         -         -         -         -    11,201   4.82       11,201
  Federal Home Loan
    Bank advances                 -         -         -         -         -    15,000    15,000   5.44       15,219
  Federal funds
    purchased                     -         -         -         -         -         -     4,750   6.84        4,750
                           --------  --------  --------  --------  --------  --------  --------            --------
      Total                $248,908  $ 39,063  $  8,694  $  1,240  $  1,819  $ 15,000  $457,498   5.16     $459,925
                           ========  ========  ========  ========  ========  ========  ========            ========

(1) The average interest rate related to debt securities is stated on a fully
    taxable equivalent basis, assuming a 34% federal income tax rate and
    applicable state income tax rate, reduced by the nondeductible portion of
    interest expense.

(2) Debt securities are reported on the basis of amortized cost. Mortgage-backed
    securities which have monthly curtailments of principal are categorized by
    final maturity.

(3) Nonaccrual loans are included in the balance of loans. The allowance for
    loan losses is excluded.
</TABLE>

<PAGE>
Capital Adequacy

         Under guidelines established by the Board of Governors of the Federal
Reserve System, capital adequacy is currently measured for regulatory purposes
by certain risk-based capital ratios, supplemented by a leverage capital ratio.
The risk-based capital ratios are determined by expressing allowable capital
amounts, defined in terms of Tier 1, Tier 2 and Tier 3, as a percentage of
risk-weighted assets, which are computed by measuring the relative credit risk
of both the asset categories on the balance sheet and various off-balance sheet
exposures. Tier 1 capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other disallowed
intangible assets. Tier 2 capital, which is limited to the total of Tier 1
capital, includes allowable amounts of subordinated debt, mandatory convertible
debt, preferred stock and the allowance for loan losses. Tier 3 capital,
applicable only to financial institutions subject to certain market risk capital
guidelines, is capital allocated to support the market risk related to a
financial institution's ongoing trading activities. At December 31, 2000, FNB
Corp. and the Bank were not subject to the market risk capital guidelines and,
accordingly, had no Tier 3 capital allocation. Total capital, for risk-based
purposes, consists of the sum of Tier 1, Tier 2 and Tier 3 capital. Under
current requirements, the minimum total capital ratio is 8.00% and the minimum
Tier 1 capital ratio is 4.00%. At December 31, 2000, FNB Corp. and the Bank had
total capital ratios of 15.15% and 14.69%, respectively, and Tier 1 capital
ratios of 14.05% and 13.58%.

         The leverage capital ratio, which serves as a minimum capital standard,
considers Tier 1 capital only and is expressed as a percentage of average total
assets for the most recent quarter, after reduction of those assets for goodwill
and other disallowed intangible assets at the measurement date. As currently
required, the minimum leverage capital ratio is 4.00%. At December 31, 2000, FNB
Corp. and the Bank had leverage capital ratios of 9.92% and 9.58%, respectively.

         The Bank is also required to comply with prompt corrective action
provisions established by the Federal Deposit Insurance Corporation Improvement
Act. To be categorized as well-capitalized, the Bank must have a minimum ratio
for total capital of 10.00%, for Tier 1 capital of 6.00% and for leverage
capital of 5.00%. As noted above, the Bank met all of those ratio requirements
at December 31, 2000 and, accordingly, is well-capitalized under the regulatory
framework for prompt corrective action.
<PAGE>
Balance Sheet Review

         Asset growth was slightly higher in 2000 than in 1999. Total assets
increased $48,171,000 or 9.3% in 2000 compared to $45,280,000 or 9.6% in 1999.
Deposits grew $45,438,000 or 10.6% and $26,792,000 or 6.7%, respectively, in the
same periods. Retail repurchase agreements increased $534,000 in 2000 after
declining $817,000 in 1999. A portion of the 1999 asset growth was funded by
initial advances totaling $15,000,000 from the Federal Home Loan Bank, which was
also the level of these advances at December 31, 2000. The average asset growth
rates were 11.0% in 2000 and 6.4% in 1999. The corresponding average deposit
growth rates were 11.5% and 6.4%.

         Certain balance sheet restructuring matters are discussed in "Business
Development Matters".
<PAGE>
Investment Securities

         Investments are carried on the consolidated balance sheet at estimated
fair value for available-for-sale securities and at amortized cost for
held-to-maturity securities. Table 6 presents information, on the basis of
selected maturities, about the composition of the investment securities
portfolio for each of the last three years. A change in the classification of
investment securities on January 1, 2001 is discussed in "Accounting
Pronouncement Matters".

Table 6
Investment Securities Portfolio Analysis

<TABLE>
<CAPTION>
                                                                  December 31
                                           -------------------------------------------------------
                                                        2000                       1999      1998
                                           -------------------------------------  ------    ------
                                                      Estimated    Taxable
                                           Amortized    Fair     Equivalent      Carrying  Carrying
                                              Cost      Value      Yield (1)       Value    Value
                                           ---------  --------   ----------      --------  --------
                                                            (dollars in thousands)
<S>                                         <C>       <C>             <C>         <C>       <C>
Available for Sale
  U.S. Treasury:
    Within one year                         $   749   $   753         7.20%       $   758   $ 1,258
    One to five years                             -         -            -            250     1,543
                                            -------   -------                     -------   -------
         Total                                  749       753         7.20          1,008     2,801
                                            -------   -------                     -------   -------

  U.S. Government agencies and
    corporations:
    Within one year                           3,250     3,240         6.05          1,492     2,344
    One to five years                        26,221    25,975         6.44         13,131     8,465
    Five to ten years                        38,883    38,563         6.84         43,214    40,267
    Over ten years                            1,500     1,494         7.63              -         -
                                            -------   -------                     -------   -------
         Total                               69,854    69,272         6.68         57,837    51,076
                                            -------   -------                     -------   -------

  Mortgage-backed securities                      -         -            -              -       230
                                            -------   -------                     -------   -------

  Total debt securities                      70,603    70,025         6.68         58,845    54,107
  Equity securities                           2,969     2,998                       2,220     1,881
                                            -------   -------                     -------   -------
         Total available-for-sale
           securities                       $73,572   $73,023                     $61,065   $55,988
                                            =======   =======                     =======   =======

Held to Maturity
  U.S. Treasury:
    Within one year                         $     -   $     -            -        $     -   $   502
                                            -------   -------                     -------   -------

  U.S. Government agencies and
    corporations:
    Within one year                           3,499     3,491         6.11          1,001     1,700
    One to five years                        28,190    27,916         6.48          7,796     9,794
    Five to ten years                         4,400     4,352         6.55         28,292    31,039
                                            -------   -------                     -------   -------
         Total                               36,089    35,759         6.45         37,089    42,533
                                            -------   -------                     -------   -------

  Mortgage-backed securities                    483       488         7.13            594     1,168
                                            -------   -------                     -------   -------

  State, county and municipal:
    Within one year                           1,092     1,098         9.21          1,330       845
    One to five years                         4,483     4,561         8.13          4,495     5,261
    Five to ten years                         7,637     7,926         8.07          6,645     6,358
    Over ten years                            6,523     6,767         7.82          7,578     7,822
                                            -------   -------                     -------   -------
         Total                               19,735    20,352         8.07         20,048    20,286
                                            -------   -------                     -------   -------

  Other debt securities:
    Within one year                               -         -            -              -         -
    One to five years                           499       501         6.48            499       994
    Five to ten years                           492       488         6.66            491         -
    Over ten years                            2,063     2,139         9.88              -         -
                                            -------   -------                     -------   -------
         Total                                3,054     3,128         8.81            990       994
                                            -------   -------                     -------   -------

         Total held-to-maturity
           securities                       $59,361   $59,727         7.11        $58,721   $65,483
                                            =======   =======                     =======   =======

(1) Yields are stated on a fully taxable equivalent basis, assuming a 34%
    federal income tax rate and applicable state income tax rate, reduced by the
    nondeductible portion of interest expense.
</TABLE>

<PAGE>

         Additions to the investment securities portfolio depend to a large
extent on the availability of investable funds that are not otherwise needed to
satisfy loan demand. Because the growth in total assets exceeded that for loans
in 2000 and as investments were further impacted by the balance sheet
restructuring matters discussed in "Business Development Matters", the level of
investment securities was increased $12,598,000 or 10.5%. In 1999, when the
growth in loans exceeded that for total assets, there was a net decrease of
$1,685,000 or 1.4% in the level of investment securities. Investable funds not
otherwise utilized are temporarily invested on an overnight basis as federal
funds sold, the level of which is affected by such considerations as near-term
loan demand and liquidity needs. Based on funds requirements, the Bank was a net
purchaser of funds at December 31, 2000.

<PAGE>

Loans

         The Corporation's primary source of revenue and largest component of
earning assets is the loan portfolio. Loans experienced growth of $34,897,000 or
9.7% in 2000 and $46,001,000 or 14.6% in 1999. Average loans increased
$56,849,000 or 17.3% and $20,837,000 or 6.8%, respectively. The ratio of average
loans to average deposits increased from 80.6% in 1999 to 84.8% in 2000. The
ratio of loans to deposits at December 31, 2000 was 83.8%.

         Table 7 sets forth the major categories of loans for each of the last
five years. The maturity distribution and interest sensitivity of selected loan
categories at December 31, 2000 are presented in Table 8.

Table 7
Loan Portfolio Composition

<TABLE>
<CAPTION>
                                                                      December 31
                                    ------------------------------------------------------------------------------------
                                         2000               1999             1998             1997            1996
                                    ---------------   ---------------  ---------------  --------------  ------------
                                     Amount     %      Amount     %     Amount     %     Amount     %     Amount     %
                                    --------  -----   --------  -----  --------  -----  --------  -----  --------  -----
                                                                       (dollars in thousands)

<S>                                 <C>        <C>    <C>        <C>   <C>        <C>   <C>        <C>   <C>        <C>
Commercial and agricultural         $160,057   41.5   $125,331   34.7  $ 99,055   32.0  $ 84,221   28.6  $ 62,678   23.8
Real estate - construction             5,734    1.5      5,472    1.5     8,056    2.6     7,801    2.6     5,768    2.2
Real estate - mortgage:
  1-4 family residential             165,057   42.8    170,577   47.3   151,552   49.0   146,588   49.7   129,738   49.1
  Commercial and other                16,050    4.2     22,214    6.2    21,423    6.9    24,535    8.3    26,220    9.9
Consumer                              25,290    6.5     30,340    8.4    29,477    9.5    31,772   10.8    39,616   15.0
Leases                                13,679    3.5      6,832    1.9         -      -         -      -         -      -
                                     -------  -----    -------  -----   -------  -----   -------  -----   -------  -----
Loans held for investment            385,867  100.0    360,766  100.0   309,563  100.0   294,917  100.0   264,020  100.0
                                              =====             =====            =====            =====            =====
Loans held for sale                    9,870                74            5,276            1,608                -
                                    --------          --------         --------         --------         --------
Gross loans                         $395,737          $360,840         $314,839         $296,525         $264,020
                                    ========          ========         ========         ========         ========
</TABLE>

Table 8
Selected Loan Maturities
                                            December 31, 2000
                               --------------------------------------------
                               One Year     One to        Over
                               or Less    Five Years   Five Years   Total
                               --------   ----------   ----------  --------
                                             (in thousands)

Commercial and agricultural     $59,701     $67,192    $33,164     $160,057
Real estate - construction        3,267       1,747        720        5,734
                               --------   ---------    -------     --------
         Total selected loans   $62,968     $68,939    $33,884     $165,791
                               ========   =========    =======     ========

Sensitivity to rate changes:
  Fixed interest rates          $20,227     $39,100    $18,132     $ 77,459
  Variable interest rates        42,741      29,839     15,752       88,332
                               --------   ---------    -------     --------
         Total                  $62,968     $68,939    $33,884     $165,791
                               ========   =========    =======     ========

         The commercial and agricultural loan portfolio was primarily
responsible for loan growth in 2000. An increase was also recorded for lease
financing contracts, a new loan product added in 1999. Loan growth and the
composition of the loan portfolio, especially for 1-4 family residential
mortgage loans, are being affected by certain balance sheet restructuring
matters as discussed in "Business Development Matters".

<PAGE>
Asset Quality

         Management considers the Bank's asset quality to be of primary
importance. A formal loan review function, independent of loan origination, is
used to identify and monitor problem loans. As part of the loan review function,
a third party assessment group is employed to review the underwriting
documentation and risk grading analysis. In determining the allowance for loan
losses and any resulting provision to be charged against earnings, particular
emphasis is placed on the results of the loan review process. Consideration is
also given to historical loan loss experience, the value and adequacy of
collateral, and economic conditions in the Bank's market area. For loans
determined to be impaired, the allowance is based on discounted cash flows using
the loan's initial effective interest rate or the fair value of the collateral
for certain collateral dependent loans. This evaluation is inherently subjective
as it requires material estimates, including the amounts and timing of future
cash flows expected to be received on impaired loans that may be susceptible to
significant change. The unallocated portion of the allowance for loan losses
represents management's estimate of the appropriate level of reserve to provide
for probable losses inherent in the loan portfolio. Considerations in
determining the unallocated portion of the allowance for loan losses include
general economic and lending trends and other factors.

         Management's policy in regard to past due loans is conservative and
normally requires a prompt charge-off to the allowance for loan losses following
timely collection efforts and a thorough review. Further efforts are then
pursued through various means available. Loans carried in a nonaccrual status
are generally collateralized and the possibility of future losses is considered
in the determination of the allowance for loan losses.

         At December 31, 2000, the Bank had impaired loans which totaled
$321,000 and were also on nonaccrual status. The related allowance for loan
losses on these loans amounted to $73,000. At December 31, 1999 the Bank had
impaired loans which totaled $1,420,000 and were also on nonaccrual status. The
related allowance for loan losses on these loans amounted to $289,000.

         Table 9 presents an analysis of the changes in the allowance for loan
losses and of the level of nonperforming assets for each of the last five years.
Information about management's allocation of the allowance for loan losses by
loan category is presented in Table 10.

<PAGE>

Table 9
Allowance for Loan Losses and Nonperforming Assets

<TABLE>
<CAPTION>
                                                               2000      1999      1998      1997      1996.
                                                              ------    ------    ------    ------    ------
                                                                         (dollars in thousands)
Allowance for Loan Losses
<S>                                                           <C>       <C>       <C>       <C>       <C>
  Balance at beginning of year                                $3,289    $2,954    $2,694    $2,375    $2,266

  Charge-offs:
    Commercial and agricultural                                  603        49         9        66        24
    Real estate - construction                                     -         -         -         -         -
    Real estate - mortgage                                        21         2         -         2        12
    Consumer                                                     277       306       387       449       543
    Leases                                                        12         -         -         -         -
                                                              ------    ------    ------    ------    ------
         Total charge-offs                                       913       357       396       517       579
                                                              ------    ------    ------    ------    ------
  Recoveries:
    Commercial and agricultural                                  117        16        16        14        12
    Real estate - construction                                     -         -         -         -         -
    Real estate - mortgage                                         6         -         -        11         3
    Consumer                                                     130       138       158       141       147
    Leases                                                         -         -         -         -         -
                                                              ------    ------    ------    ------    ------
         Total recoveries                                        253       154       174       166       162
                                                              ------    ------    ------    ------    ------

  Net loan charge-offs                                           660       203       222       351       417
  Provision for loan losses (1)                                1,802       511       482       670       526
  Allowance adjustment for loans sold                            (79)        -         -         -         -
  Adjustment to conform fiscal periods                             -        27         -         -         -
                                                              ------    ------    ------    ------    ------
  Balance at end of year                                      $4,352    $3,289    $2,954    $2,694    $2,375
                                                              ======    ======    ======    ======    ======

Nonperforming Assets, at end of year
  Nonaccrual loans                                            $1,478    $1,602    $  855    $  257    $   92
  Accruing loans past due 90 days or more                        367       298       263       167       231
                                                              ------    ------    ------    ------    ------
         Total nonperforming loans                             1,845     1,900     1,118       424       323
  Foreclosed assets                                               33         3         -        23        38
  Other real estate owned                                        163       423        20        27        29
                                                              ------    ------    ------    ------    ------
         Total nonperforming assets                           $2,041    $2,326    $1,138    $  474    $  390
                                                              ======    ======    ======    ======    ======

Ratios
  Net loan charge-offs to average loans                          .17%      .06%      .07%      .13%      .16%
  Net loan charge-offs to allowance for loan losses            15.17      6.17      7.52     13.03     17.56
  Allowance for loan losses to year-end loans
    excluding loans held for sale                               1.13       .91       .95       .91       .90
  Total nonperforming loans to year-end loans
    excluding loans held for sale                                .48       .53       .36       .14       .12

(1) Approximately $450,000 of the total provision for loan losses in 2000 was
    related to aligning the credit risk methodologies of FNB Corp. and Carolina
    Fincorp, Inc.
</TABLE>

Table 10
Allocation of Allowance For Loan Losses

<TABLE>
<CAPTION>
                                                      December 31
                                    ----------------------------------------------
                                     2000      1999      1998      1997      1996
                                    ------    ------    ------    ------    ------
                                                    (in thousands)

<S>                                 <C>       <C>       <C>       <C>       <C>
Commercial and agricultural         $1,714    $1,070    $  821    $  719    $  650
Real estate - construction              21        14        31        23        16
Real estate - mortgage                 982       735       643       633       538
Consumer                             1,076     1,023     1,027       971       905
Leases                                 201        58         -         -         -
Unallocated                            358       389       432       348       266
                                    ------    ------    ------    ------    ------
   Total allowance for loan losses  $4,352    $3,289    $2,954    $2,694    $2,375
                                    ======    ======    ======    ======    ======
</TABLE>

<PAGE>
Deposits

         The level and mix of deposits is affected by various factors, including
general economic conditions, the particular circumstances of local markets and
the specific deposit strategies employed. In general, broad interest rate
declines tend to encourage customers to consider alternative investments such as
mutual funds and tax-deferred annuity products, while interest rate increases
tend to have the opposite effect.

         The Bank's level and mix of deposits has been specifically affected by
the following factors. Time deposits, reflecting the effect of promotions for
premium-rate certificates of deposits and the increase in time deposits obtained
from governmental units, grew $43,867,000 in 2000 and $23,488,000 in 1999,
accounting for the majority of total deposit growth in each year. The level of
time deposits obtained from governmental units amounted to $46,800,000,
$39,179,000 and $26,555,000 at December 31, 2000, 1999 and 1998, respectively.
Money market deposits increased $1,974,000 in 2000 and $5,247,000 in 1999 due to
a high-yield product that has had steady growth since its introduction in 1996.

         Table 11 shows the year-end and average deposit balances for the years
2000, 1999 and 1998 and the changes in 2000 and 1999.



Table 11
Analysis of Deposits

<TABLE>
<CAPTION>
                                                       2000                       1999             1998
                                             -----------------------    ------------------------  -------
                                                        Change from                Change from
                                                         Prior Year                 Prior Year
                                                       -------------              --------------
                                             Balance   Amount    %      Balance   Amount     %    Balance
                                             --------  ------  -----    --------  -------  -----  -------
                                                                  (dollars in thousands)
<S>                                          <C>      <C>       <C>     <C>       <C>       <C>   <C>
Year-End Balances
  Interest-bearing deposits:
    Demand deposits                          $ 56,481 $(1,532)  (2.6)   $ 58,013  $2,551    4.6   $ 55,462
    Savings deposits                           34,441  (1,438)  (4.0)     35,879  (2,542)  (6.6)    38,421
    Money market deposits                      35,901   1,974    5.8      33,927   5,247   18.3     28,680
                                             -------- -------           -------- -------          --------
         Total                                126,823    (996)   (.8)    127,819   5,256    4.3    122,563
    Certificates and other time
     deposits                                 299,724  43,867   17.1     255,857  23,488   10.1    232,369
                                             -------- -------           -------- -------          --------
         Total interest-bearing deposits      426,547  42,871   11.2     383,676  28,744    8.1    354,932
  Noninterest-bearing demand deposits          45,901   2,567    5.9      43,334  (1,952)  (4.3)    45,286
                                             -------- -------           -------- -------          --------
         Total deposits                      $472,448 $45,438   10.6    $427,010 $26,792    6.7   $400,218
                                             ======== =======           ======== =======          ========
Average Balances
  Interest-bearing deposits:
    Demand deposits                          $ 57,332 $ 2,203    4.0    $ 55,129 $ 3,950    7.7   $ 51,179
    Savings deposits                           35,844  (1,727)  (4.6)     37,571  (1,024)  (2.7)    38,595
    Money market deposits                      34,798   2,959    9.3      31,839   6,409   25.2     25,430
                                             -------- -------           -------- -------          --------
         Total                                127,974   3,435    2.8     124,539   9,335    8.1    115,204
    Certificates and other time
     deposits                                 279,586  40,297   16.8     239,289  12,375    5.5    226,914
                                             -------- -------           -------- -------          --------
         Total interest-bearing deposits      407,560  43,732   12.0     363,828  21,710    6.3    342,118
  Noninterest-bearing demand deposits          46,859   3,313    7.6      43,546   2,849    7.0     40,697
                                             -------- -------           -------- -------          --------
         Total deposits                      $454,419 $47,045   11.5    $407,374 $24,559    6.4   $382,815
                                             ======== =======           ======== =======          ========
</TABLE>
<PAGE>

Business Development Matters

         As discussed in the "Overview" and in Note 2 to Consolidated Financial
Statements, the Corporation completed a merger on April 10, 2000 for the
acquisition of Carolina Fincorp, Inc. ("Carolina Fincorp"), holding company for
Richmond Savings Bank, Inc., SSB ("Richmond Savings"), headquartered in
Rockingham, North Carolina, in a transaction accounted for as a pooling of
interests.

         Prior to March 26, 1999, the Bank's data processing, item capture and
statement rendering operations were outsourced under a service bureau
arrangement. Commencing in the 1998 fourth quarter, the Bank began the process
of converting these operations to an in-house basis. Conversion to the
replacement systems occurred on March 26, 1999. Richmond Savings, however, was
on a service bureau arrangement until its merger into the Bank on June 26, 2000.
The total capital expenditure outlay for hardware and software amounted to
approximately $1,700,000, of which approximately one-half was recorded in 1998
and the remainder in 1999. In addition to capital expenditures for the new
system, the Bank incurred certain expenses in 1998, totaling approximately
$302,000, related to deconversion from the prior arrangement.

         In the 1998 fourth quarter, the Bank received regulatory approval for
establishment of a new branch office in Trinity, North Carolina. Construction of
the permanent Trinity facility is expected to be complete in 2001, resulting in
a total capital outlay of approximately $1,000,000, of which approximately
one-third was recorded in 1998 related to the purchase of land. Prior to
completion of the permanent facility, a temporary mobile office, which opened in
August 1999, is being operated at this site.

         In the 2000 fourth quarter, management adopted a balance sheet
restructuring project to reduce the level of lower yielding, 1-4 family
residential mortgage loans by selling those loans and redeploying the funds in
other types of assets, including specific purchases of bank owned life insurance
and a more general redeployment to other loan programs and investment
securities. 1-4 family residential mortgage loans totaling $20,938,000 were
transferred to loans held for sale, and of that amount, $12,199,000 were sold in
2000 and the remainder were sold in the first quarter of 2001. In December 2000,
single premium purchases of life insurance amounting to $10,000,000 were
recorded as bank owned life insurance in other assets on the consolidated
balance sheet. Income relating to the cash surrender value of the bank owned
life insurance will be recorded as noninterest income, while the loans sold had
generated interest income. The effective reduction of interest income will tend
to lower the net yield on earning assets and net interest spread in future
periods. Management believes that the income resulting from the bank owned life
insurance, which is not subject to income tax, will produce a greater
contribution to net income than did the income from the loans sold.
<PAGE>
Accounting Pronouncement Matters

         On January 1, 2001, the Corporation adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as further amended by Statement of Financial Accounting Standards
No. 138, "Accounting for Certain Derivative Financial Instruments and Certain
Hedging Activities, an amendment of FASB Statement No. 138" (collectively
referred to as "SFAS No. 133"). This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. The accounting for
changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. As permitted by SFAS No. 133, on
January 1, 2001, the Corporation transferred all of its securities from the
held-to-maturity portfolio to the available-for-sale portfolio as follows:

                                           Securities Transferred
                                       ------------------------------
                                                   Estimated   Pretax
                                       Amorized      Fair       Gain
                                          Cost       Value     (Loss)
                                        -------     -------    ------
                                               (in thousands)
  U.S. Government agencies and
    corporations                        $36,089     $35,759    $(330)
  Mortgage-backed securities                483         488        5
  State, county and municipal            19,735      20,352      617
  Other debt securities                   3,054       3,128       74
                                        -------     -------    -----
       Total                            $59,361     $59,727    $ 366
                                        =======     =======    =====

         As of January 1, 2001, the transfer of the securities had a net of tax
effect of $242,000 on other comprehensive income.

         On January 1, 2001, the Company had no embedded derivative instruments
requiring separate accounting treatment and had identified fixed rate conforming
loan commitments as its only freestanding derivative instruments. The fair value
of these commitments was mot material and therefore the adoption of SFAS No. 133
on January 1, 2001, is not expected to have a material impact on the
Corporation's consolidated financial statements.

         The FASB has issued Statement of Financial Accounting Standards No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). This statement replaces SFAS No.
125 ("Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities") and revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of the provisions of SFAS
No. 125 without consideration. SFAS No. 140 provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities, based on application of a financial components approach that
focuses on control. SFAS No. 140 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March 2001.
Adoption of SFAS No. 140 is not expected to have a material impact on the
Corporation's consolidated financial statements.
<PAGE>
Effects of Inflation

         The operations of the Bank and therefore of the Corporation are subject
to the effects of inflation through interest rate fluctuations and changes in
the general price level of noninterest operating expenses. Such costs as
salaries, fringe benefits and utilities have tended to increase at a rate
comparable to or even greater than the general rate of inflation. Broadly
speaking, all operating expenses have risen to higher levels as inflationary
pressures have increased. Management has responded to this situation by
evaluating and adjusting fees charged for specific services and by emphasizing
operating efficiencies.

         The level of interest rates is also considered to be influenced by
inflation, rising whenever inflationary expectations and the actual level of
inflation increase and declining whenever the inflationary outlook appears to be
improving. Management constantly monitors this situation, attempting to adjust
both rates received on earning assets and rates paid on interest-bearing
liabilities in order to maintain the desired net yield on earning assets.
<PAGE>
Cautionary Statement for Purpose of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

         The statements contained in this Annual Report on Form 10-K that are
not historical facts are forward-looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995), which can be identified
by the use of forward-looking terminology such as "believes", "expects",
"plans", "projects", "goals", "estimates", "may", "could", "should", or
"anticipates" or the negative thereof or other variations thereon of comparable
terminology, or by discussions of strategy that involve risks and uncertainties.
In addition, from time to time, the Corporation or its representatives have made
or may make forward-looking statements, orally or in writing. Such
forward-looking statements may be included in, but are not limited to, various
filings made by the Corporation with the Securities and Exchange Commission, or
press releases or oral statements made by or with the approval of an authorized
executive officer of the Corporation. Forward-looking statements are based on
management's current views and assumptions and involve risks and uncertainties
that could significantly affect expected results. The Corporation wishes to
caution the reader that factors, such as those listed below, in some cases have
affected and could affect the Corporation's actual results, causing actual
results to differ materially from those in any forward-looking statement. These
factors include: (i) competitive pressure in the banking industry or in the
Corporation's markets may increase significantly, (ii) changes in the interest
rate environment may reduce margins, (iii) general economic conditions, either
nationally or regionally, may be less favorable than expected, resulting in,
among other things, credit quality deterioration, (iv) changes may occur in
banking legislation and in the environment, (v) changes may occur in general
business conditions and inflation and (vi) changes may occur in the securities
markets.
<PAGE>
Table 12
Quarterly Financial Data

                                     First   Second    Third   Fourth
                                    -------  -------  ------- -------
                                  (in thousands, except per share data)
2000
Interest income                     $ 9,814  $10,330  $10,734  $11,058
Interest expense                      4,632    5,013    5,445    5,818
                                    -------  -------  -------  -------
Net interest income                   5,182    5,317    5,289    5,240
Provision for loan losses               157      835      160      650
                                    -------  -------  -------   -------
Net interest income after
   provision for loan losses          5,025    4,482    5,129    4,590
Noninterest income                    1,093    1,147    1,070    1,191
Merger related expenses                   -    2,796       -         -
Noninterest expense                   3,948    4,086    3,957    3,710
                                    -------  -------  -------  -------
Income (loss)before income taxes      2,170   (1,253)   2,242    2,071
Income taxes (benefit)                  689     (278)     698      605
                                    -------  -------- -------  -------

Net income (loss)                   $ 1,481  $  (975) $ 1,544  $ 1,466
                                    =======  =======  =======  =======
Per share data:
   Net income (loss):
      Basic                         $   .30  $  (.19) $   .31  $   .29
      Diluted                           .29     (.19)     .30      .29
   Cash dividends declared              .12      .12      .12      .15
   Common stock price (1):
      High                            17.00    12.50    12.00    12.13
      Low                             10.50     6.00     9.50    11.19

1999
Interest income                     $ 8,721  $ 8,795  $ 8,978  $ 9,328
Interest expense                      3,901    3,944    4,033    4,325
                                    -------  -------  -------  -------
Net interest income                   4,820    4,851    4,945    5,003
Provision for loan losses                99      119       84      209
                                    -------  -------  -------  -------
Net interest income after
   provision for loan losses          4,721    4,732    4,861    4,794
Noninterest income                    1,008    1,027    1,008    1,025
Noninterest expense                   3,659    3,701    3,895    3,827
                                    -------  -------  -------  -------
Income before income taxes            2,070    2,058    1,974    1,992
Income taxes                            646      646      613      599
                                    -------  -------  -------  -------

Net income                          $ 1,424  $ 1,412  $ 1,361  $ 1,393
                                    =======  =======  =======  =======

Per share data:
   Net income:
      Basic                         $   .28  $   .28  $   .27  $   .28
      Diluted                           .27      .27      .27      .27
   Cash dividends declared              .12      .12      .12      .15
   Common stock price (1):
      High                            29.00    27.00    24.25    22.00
      Low                             20.00    20.00    19.00    13.25

(1)  FNB Corp. common stock is traded on the NASDAQ National Market System under
     the symbol FNBN. At December 31, 2000, there were 1,697 shareholders of
     record.

<PAGE>
Independent Auditors' Report


The Board of Directors
FNB Corp.

We have audited the accompanying consolidated balance sheets of FNB Corp. and
subsidiary as of December 31, 2000 and 1999, and the related consolidated
statements of income, shareholders' equity and comprehensive income and cash
flows for each of the years in the three-year period ended December 31, 2000.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FNB Corp. and
subsidiary as of December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the years in the three-year period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.


                                                                        KPMG LLP



Greenville, South Carolina
March 16, 2001

<PAGE>
                            FNB CORP. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                                  December 31
                                                                            2000              1999
                                                                            ----              ----
                                                                      (in thousands, except share data)
Assets
<S>                                                                       <C>              <C>
Cash and due from banks                                                  $ 14,108         $ 18,808
Interest-bearing bank accounts                                                  -            3,115
Federal funds sold                                                             94                -
Investment securities:
   Available for sale, at estimated fair value
      (amortized cost of $73,572 in 2000 and
      $64,063 in 1999)                                                     73,023           61,065
   Held to maturity (estimated fair value of
      $59,727 in 2000 and $56,953 in 1999)                                 59,361           58,721
Loans:
   Loans held for sale                                                      9,870               74
   Loans held for investment                                              385,867          360,766
   Less allowance for loan losses                                          (4,352)          (3,289)
                                                                         --------         --------
                  Net loans                                               391,385          357,551
                                                                         --------         --------
Premises and equipment, net                                                 9,596           10,330
Other assets                                                               18,072            7,878
                                                                         --------         --------

                  Total Assets                                           $565,639         $517,468
                                                                         ========         ========

Liabilities and Shareholders' Equity

Deposits:
   Noninterest-bearing demand deposits                                   $ 45,901         $ 43,334
   Interest-bearing deposits:
      Demand, savings and money market deposits                           126,823          127,819
      Time deposits of $100,000 or more                                   101,584           86,818
      Other time deposits                                                 198,140          169,039
                                                                         --------         --------
                  Total deposits                                          472,448          427,010
Retail repurchase agreements                                               11,201           10,667
Federal Home Loan Bank advances                                            15,000           15,000
Federal funds purchased                                                     4,750            7,735
Other liabilities                                                           7,118            4,988
                                                                         --------         --------
                  Total Liabilities                                       510,517          465,400
                                                                         --------         --------
 Shareholders' equity:
   Preferred stock, $10.00 par value; authorized
      200,000 shares, none issued                                               -                -
   Common stock, $2.50 par value; authorized
      10,000,000 shares, issued 5,059,641 shares
      in 2000 and 5,139,520 shares in 1999                                 12,649            12,849
   Surplus                                                                  2,836             4,131
   Retained earnings                                                       40,000            39,158
   ESOP and restricted stock plans                                              -            (2,092)
   Accumulated other comprehensive loss                                      (363)           (1,978)
                                                                         --------          --------
                  Total Shareholders' Equity                               55,122            52,068
                                                                         --------          --------

                  Total Liabilities and Shareholders' Equity             $565,639          $517,468
                                                                         ========          ========

Commitments (Note 17)
</TABLE>


          See accompanying notes to consolidated financial statements.


<PAGE>


                            FNB CORP. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                                       Years Ended December 31
                                                                                -------------------------------------
                                                                                   2000          1999         1998
                                                                               (in thousands, except per share data)
<S>                                                                             <C>           <C>          <C>
Interest Income
  Interest and fees on loans                                                    $  34,241     $  27,970    $  27,343
  Interest and dividends on investment securities:
    Taxable income                                                                  6,331         6,430        6,359
    Non-taxable income                                                                981           991          994
  Other interest income                                                               383           431          415
                                                                                ---------      ---------    ---------
                  Total interest income                                            41,936        35,822       35,111
                                                                                ---------      ---------    ---------
Interest Expense
  Deposits                                                                         19,501        15,183       15,226
  Retail repurchase agreements                                                        516           501          444
  Federal Home Loan Bank advances                                                     819           433            -
  Other borrowed funds                                                                 72            86           43
                                                                                ---------      ---------    ---------
                  Total interest expense                                           20,908        16,203       15,713
                                                                                ---------      ---------    ---------

Net Interest Income                                                                21,028        19,619       19,398
  Provision for loan losses                                                         1,802           511          482
                                                                                ---------      ---------    ---------
Net Interest Income After Provision for Loan Losses                                19,226        19,108       18,916
                                                                                ---------      ---------    ---------
Noninterest Income
  Service charges on deposit accounts                                               2,236         2,058        1,986
  Annuity and brokerage commissions                                                   414           482          294
  Cardholder and merchant services income                                             524           450          368
  Other service charges, commissions and fees                                         674           583          496
  Other income                                                                        653           495          612
                                                                                 ---------      ---------   ---------
                 Total noninterest income                                           4,501         4,068        3,756
Noninterest Expense
  Personnel expense                                                                 8,534         7,792        7,136
  Occupancy expense                                                                   835           788          664
  Furniture and equipment expense                                                   1,709         1,472        1,046
  Data processing services                                                            831         1,188        1,819
  Merger related expenses                                                           2,796             -            -
  Other expense                                                                     3,792         3,842        3,808
                                                                                 ---------      ---------   ---------
                 Total noninterest expense                                         18,497        15,082       14,473
                                                                                 ---------      ---------   ---------
Income Before Income Taxes                                                          5,230         8,094        8,199
Income taxes                                                                        1,714         2,504        2,568
                                                                                 ---------      ---------   ---------

Net Income                                                                      $   3,516      $  5,590    $   5,631
                                                                                 =========      =========   =========
Net income per common share:
  Basic                                                                         $     .70      $   1.11    $    1.12
  Diluted                                                                       $     .69      $   1.09    $    1.09

Weighted average number of shares outstanding:
  Basic                                                                         5,035,529     5,022,403    5,043,181
  Diluted                                                                       5,077,937     5,138,365    5,188,129


</TABLE>


          See accompanying notes to consolidated financial statements.


<PAGE>


                            FNB CORP. AND SUBSIDIARY

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                                             ESOP and    Accumulated
                                          Common Stock                                      Restricted      Other
                                    -----------------------                     Retained      Stock     Comprehensive
                                      Shares        Amount        Surplus       Earnings      Plans      Income (loss)      Total
                                    ----------   ----------    ----------    ----------    ----------     ----------     ----------
                                                               (in thousands, except share data)
<S>                                  <C>         <C>           <C>             <C>             <C>            <C>            <C>
Balance, December 31, 1997           3,282,510   $    8,206    $   14,457    $   36,136    $   (1,491)    $       41     $   57,349
Comprehensive income:
  Net income                              --           --            --           5,631          --             --            5,631
  Other comprehensive income:
    Unrealized securities gains,
    net of income taxes of $6             --           --            --            --            --               10             10
                                                                                                                         ----------
  Total comprehensive income                                                                                                  5,641
                                                                                                                         ----------
Cash dividends declared,
  $.45 per share                          --           --            --          (2,067)         --             --           (2,067)
Return of capital dividend                --           --         (10,761)         --            (661)          --          (11,422)
ESOP and restricted stock
  plan transactions                     42,695          108           919          --            (379)          --              648
Two-for-one stock split effected
  in the form of a 100%
  stock dividend                     1,825,343        4,563          (626)       (3,937)         --             --             --
 Common stock issued through:
  Dividend reinvestment plan             1,015            2            24          --            --             --               26
  Stock option plan                      9,193           23           192          --            --             --              215
                                    ----------   ----------    ----------    ----------    ----------     ----------     ----------
Balance, December 31, 1998           5,160,756       12,902         4,205        35,763    $   (2,531)            51         50,390

Comprehensive income:
  Net income                              --           --            --           5,590          --             --            5,590
  Other comprehensive income:
    Unrealized securities losses,
    net of income tax benefit
    of $1,037                             --           --            --            --            --           (2,009)        (2,009)
                                                                                                                         ----------
  Total comprehensive income                                                                                                  3,581
                                                                                                                         ----------
Cash dividends declared,
  $.51 per share                          --           --            --          (2,285)         --             --           (2,285)
ESOP and restricted stock
  plan transactions                       --           --             (64)         --             295           --              231
Common stock issued through:
  Dividend reinvestment plan              --           --            --            --            --             --             --
  Stock option plan                      7,224           19            77          --            --             --               96
Common stock repurchased               (28,460)         (72)          (71)         (184)         --             --             (327)
Equity adjustment to conform
  fiscal periods                          --           --             (16)          274           144            (20)           382
                                    ----------   ----------    ----------    ----------    ----------     ----------     ----------
Balance, December 31, 1999           5,139,520       12,849         4,131        39,158    $   (2,092)        (1,978)        52,068
Comprehensive income:
  Net income                              --           --            --           3,516          --             --            3,516
  Other comprehensive income:
    Unrealized securities gains,
    net of income taxes of $834           --           --            --            --            --            1,615          1,615
                                                                                                                         ----------
  Total comprehensive income                                                                                                  5,131
                                                                                                                         ----------
Cash dividends declared,
  $.51 per share                          --           --            --          (2,674)         --             --           (2,674)
Cash paid for fractional
  shares in merger                        (122)        --              (1)         --            --             --               (1)
ESOP and restricted stock
  plan transactions:
    Termination of plans               (93,113)        (233)       (1,342)         --           1,960           --              385
    Other transactions                    --           --             (17)         --             132           --              115
Common stock issued through:
  Dividend reinvestment plan             4,701           12            39          --            --             --               51
  Stock option plan                     15,355           38           114          --            --             --              152
Common stock repurchased                (6,700)         (17)          (88)         --            --             --             (105)
                                    ----------   ----------    ----------    ----------    ----------     ----------     ----------
Balance, December 31, 2000           5,059,641   $   12,649    $    2,836    $   40,000    $     --       $     (363)    $   55,122
                                    ==========   ==========    ==========    ==========    ==========     ==========     ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

<PAGE>



                            FNB CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                           Years Ended December 31
                                                                                     ------------------------------------
                                                                                       2000          1999          1998
                                                                                     --------      --------      --------
                                                                                              (in thousands)
<S>                                                                                  <C>           <C>           <C>
Operating Activities
  Net income                                                                         $  3,516      $  5,590      $  5,631
  Adjustments to reconcile net income to net cash provided by operating
    activities:
      Depreciation and amortization of premises and
        equipment                                                                       1,465         1,359           987
      Provision for loan losses                                                         1,802           511           482
      Deferred income taxes                                                              (398)         (191)         (205)
      Deferred loan fees and costs, net                                                   (22)          115           180
      Premium amortization and discount accretion
        of investment securities, net                                                      47            (1)         (147)
      ESOP and restricted stock plan expenses                                             500           231           648
      Amortization of intangibles                                                          14            19            24
      Net decrease (increase) in loans held for sale                                   11,142         5,096        (4,717)
      Decrease (increase) in other assets                                                 631           436          (144)
      Increase (decrease) in other liabilities                                          2,057          (354)          590
                                                                                     --------      --------      --------
                  Net Cash Provided by Operating Activities                            20,754        12,811         3,329
                                                                                     --------      --------      --------
Investing Activities
  Available-for-sale securities:
    Proceeds from sales                                                                    77           500         1,990
    Proceeds from maturities and calls                                                  2,250        17,965        76,383
    Purchases                                                                         (11,761)      (30,039)      (80,566)
  Held-to-maturity securities:
    Proceeds from maturities and calls                                                  2,434        13,039        31,015
    Purchases                                                                          (3,117)       (6,941)      (37,801)
  Net increase in loans held for investment                                           (47,948)      (46,246)      (14,070)
  Purchases of premises and equipment                                                    (922)       (2,341)       (1,918)
  Purchases of life insurance contracts                                               (10,000)         --            --
  Other, net                                                                             (108)          340            62
                                                                                     --------      --------      --------
                  Net Cash Used in Investing Activities                               (69,095)      (53,723)      (24,905)
                                                                                     --------      --------      --------

Financing Activities
  Net increase in deposits                                                             45,438        26,645        34,869
  Increase (decrease) in retail repurchase agreements                                     534          (817)        4,047
  Increase in Federal Home Loan Bank advances                                            --          15,000          --
  Increase (decrease) in other borrowed funds                                          (2,985)        2,990         1,845
  Common stock issued                                                                     203            96           241
  Common stock repurchased                                                               (105)         (327)         --
  Cash dividends and fractional shares paid                                            (2,465)       (2,284)       (1,902)
  Return of capital dividend                                                             --            --         (11,422)
                                                                                     --------      --------      --------
                  Net Cash Provided by Financing Activities                            40,620        41,303        27,678
                                                                                     --------      --------      --------
Net Increase (Decrease) in Cash and Cash Equivalents                                   (7,721)          391         6,102
Cash and cash equivalents at beginning of year                                         21,923        23,253        17,151
Adjustment to conform fiscal periods                                                     --          (1,721)         --
                                                                                     --------      --------      --------

Cash and Cash Equivalents at End of Year                                             $ 14,202      $ 21,923      $ 23,253
                                                                                     ========      ========      ========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest                                                                         $ 19,333      $ 16,128      $ 15,456
    Income taxes                                                                        1,879         3,025         2,611
  Noncash transactions:
    Loans held for investment transferred to loans
      held for sale                                                                    20,938          --            --
    Foreclosed loans transferred to other real estate                                   1,173           549          --
    Unrealized securities gains (losses), net of income taxes                           1,615        (2,009)           10
</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                            FNB CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

Nature of Operations/Consolidation

     FNB Corp. is a one-bank holding company whose wholly-owned subsidiary is
the First National Bank and Trust Company (the "Bank"). The Bank, which has one
wholly-owned subsidiary, First National Investor Services, Inc., offers a
complete line of financial services, including loan, deposit, cash management,
investment and trust services, to individual and business customers primarily in
the region of North Carolina that includes Chatham, Montgomery, Moore, Randolph,
Richmond and Scotland counties.

     The consolidated financial statements include the accounts of FNB Corp. and
the Bank (collectively the "Corporation"). All significant intercompany balances
and transactions have been eliminated. The chief operating decision maker
reviews the results of operations of the Corporation and its subsidiary as a
single enterprise.

     The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

     As discussed in Note 2 below, the Corporation in 2000 completed a merger
for the acquisition of Carolina Fincorp, Inc. in a transaction accounted for as
a pooling of interests. Historical financial information included in these
consolidated financial statements has been restated to include the account
balances and results of operations of Carolina Fincorp, Inc.

Cash and Cash Equivalents

     For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and federal funds sold. Generally, federal
funds are purchased and sold for one-day periods.

Investment Securities

     Investment securities are categorized and accounted for as follows:

     o    Held-to-maturity securities - Debt securities that the Corporation has
          the positive intent and ability to hold to maturity are reported at
          amortized cost.

     o    Trading securities - Debt and equity securities bought and held
          principally for the purpose of being sold in the near future are
          reported at fair value, with unrealized gains and losses included in
          earnings.

     o    Available-for-sale securities - Debt and equity securities not
          classified as either held-to-maturity securities or trading securities
          are reported at fair value, with unrealized gains and losses, net of
          related tax effect, included as an item of other comprehensive income
          and reported as a separate component of shareholders' equity.

     The Corporation intends to hold its securities classified as
available-for-sale securities for an indefinite period of time but may sell them
prior to maturity. All other securities, which the Corporation has the positive
intent and ability to hold to maturity, are classified as held-to-maturity
securities.

     Interest income on debt securities is adjusted using the level yield method
for the amortization of premiums and accretion of discounts. The adjusted cost
of the specific security is used to compute gains or losses on the disposition
of securities.

<PAGE>

Loans

     Interest income on loans is generally calculated by using the constant
yield method based on the daily outstanding balance. The recognition of interest
income is discontinued when, in management's opinion, the collection of all or a
portion of interest becomes doubtful.

     Loan fees and the incremental direct costs associated with making loans are
deferred and subsequently recognized over the life of the loan as an adjustment
of interest income. Residential mortgage loans held for sale are valued at the
lower of cost or market as determined by outstanding commitments from investors
or current investor yield requirements, calculated on the aggregate loan basis.

Allowance for Loan Losses

     The allowance for loan losses represents an amount considered adequate to
absorb loan losses inherent in the portfolio. Management's evaluation of the
adequacy of the allowance is based on a review of individual loans, historical
loan loss experience, the value and adequacy of collateral, and economic
conditions in the Bank's market area. For loans determined to be impaired, the
allowance is based on discounted cash flows using the loan's initial effective
interest rate or the fair value of the collateral for certain collateral
dependent loans. Losses are charged and recoveries are credited to the allowance
for loan losses. This evaluation is inherently subjective as it requires
material estimates, including the amounts and timing of future cash flows
expected to be received on impaired loans that may be susceptible to significant
change.

     In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize changes to the allowance based
on their judgments about information available to them at the time of their
examination.

Other Real Estate

     Other real estate, which is included in other assets on the consolidated
balance sheet, represents properties acquired through foreclosure or deed in
lieu thereof and is carried at the lower of cost or fair value based on recent
appraisals, less estimated costs to sell. Declines in the fair value of
properties included in other real estate below carrying value are recognized by
a charge to income.

Mortgage Servicing Rights (MSRs)

     The rights to service mortgage loans for others are included in other
assets on the consolidated balance sheet. MSRs are capitalized based on the
allocated cost which is determined when the underlying loans are sold. MSRs are
amortized over the life of the underlying loan as an adjustment of servicing
income. Impairment reviews of MSRs are performed on a quarterly basis.

Premises and Equipment

     Premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is computed on a straight-line basis
over the estimated useful lives of the assets as follows: buildings and
improvements, 10 to 50 years and furniture and equipment, 3 to 10 years.
Leasehold improvements are amortized on a straight-line basis over the shorter
of the estimated life of the improvement or the term of the lease.

Intangible Assets

     Deposit base premiums, arising from deposit and branch purchase
acquisitions, amounted to $10,000 and $24,000 at December 31, 2000 and 1999,
respectively, and are included in other assets. The premium amounts are
amortized on an accelerated basis over ten-year periods.

Income Taxes

     Income tax expense includes both a current provision based on the amounts
computed for income tax return purposes and a deferred provision that results
from application of the asset and liability method of accounting for deferred
taxes. Under the asset and liability method, deferred tax assets and liabilities
are established for the temporary differences between the financial reporting
basis and the tax basis of the Corporation's assets and liabilities at enacted
tax rates expected to be in effect when such amounts are realized or settled.
The effect on deferred tax assets and liabilities of a change

<PAGE>

in tax rates is recognized in income in the period that includes the enactment
date.

Earnings Per Share (EPS)

     As required for entities with complex capital structures, a dual
presentation of basic and diluted EPS is included on the face of the income
statement, and a reconciliation is provided in a footnote of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.

Comprehensive Income

     Comprehensive income is defined as the change in equity of an enterprise
during a period from transactions and other events and circumstances from
nonowner sources and, accordingly, includes both net income and amounts referred
to as other comprehensive income. The items of other comprehensive income are
included in the consolidated statement of shareholders's equity and
comprehensive income. The accumulated balance of other comprehensive income is
included in the shareholders' equity section of the consolidated balance sheet.

Employee Benefit Plans

     The Corporation has a defined benefit pension plan covering substantially
all full- time employees. Pension costs, which are actuarially determined using
the projected unit credit method, are charged to current operations. Annual
funding contributions are made up to the maximum amounts allowable for Federal
income tax purposes.

     In 2000, the Corporation adopted a noncontributory, nonqualified
supplemental executive retirement plan (the "SERP") covering certain executive
employees. Annual benefits payable under the SERP are based on factors similar
to those for the pension plan, with offsets related to amounts payable under the
pension plan and social security benefits. SERP costs, which are actuarially
determined using the projected unit credit method and recorded on an unfunded
basis, are charged to current operations and credited to a liability account on
the consolidated balance sheet.

     Medical and life insurance benefits are provided by the Corporation on a
postretirement basis under defined benefit plans covering substantially all
full-time employees. Postretirement benefit costs, which are actuarially
determined using the attribution method and recorded on an unfunded basis, are
charged to current operations and credited to a liability account on the
consolidated balance sheet.

Stock Options

     The Corporation accounts for awards under employee stock-based compensation
plans in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and, acordingly, no compensation cost has been recognized for such
awards in the consolidated financial statements. As required by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", the Corporation discloses in a footnote the pro forma effect on
net income and earnings per share that would result from the use of the fair
value based method to measure compensation costs related to awards granted after
December 15, 1994.

Derivative Financial Instruments

     The Corporation may use off-balance sheet derivative contracts for interest
rate risk management purposes. The existing contracts, all of which expired in
1999, were accounted for on the accrual basis and the net interest differential,
including premiums paid, if any, were recognized as an adjustment to interest
income or expense of the related asset or liability. The Corporation does not
utilize derivative financial instruments for trading purposes.

Restatements

     Share and per share information in the consolidated financial statements
and related notes thereto have been restated, where appropriate, to reflect the
two-for-one common stock split effected in the form of a 100% stock dividend
paid to shareholders on March 18, 1998.

<PAGE>

Note 2 - Merger Information

     On April 10, 2000, the Corporation completed a merger for the acquisition
of Carolina Fincorp, Inc. ("Carolina Fincorp"), holding company for Richmond
Savings Bank, Inc., SSB ("Richmond Savings"), headquartered in Rockingham, North
Carolina, in a transaction accounted for as a pooling of interests. Accordingly,
all historical financial information included in these consolidated financial
statements has been restated to include the account balances and results of
operations of Carolina Fincorp.

     Pursuant to the terms of the merger, each share of Carolina Fincorp common
stock was converted into .79 of a share of FNB Corp. common stock, for a total
issuance of 1,478,398 FNB Corp. shares. On June 26, 2000, Richmond Savings was
merged into First National Bank and Trust Company. At March 31, 2000, Carolina
Fincorp operated five offices through Richmond Savings and had approximately
$125,943,000 in total assets, $108,848,000 in deposits and $16,332,000 in
shareholders' equity. Merger-related expenses of $2,796,000 were recorded in the
second quarter of 2000. Upon the change in control, the Carolina Fincorp ESOP
plan terminated according to its terms and unvested restricted stock plan shares
became fully vested, resulting in certain expenses considered merger-related.
Other primary components of merger-related expenses were professional fees,
investment banking fees, contract termination costs, data processing conversion
fees and severance payments. Additionally, approximately $450,000 of the total
provision for loan losses of $835,000 in the second quarter was related to
aligning the credit risk methodologies of FNB Corp. and Carolina Fincorp. The
primary components of merger-related expenses, including the amounts incurred
through December 31, 2000 and the amounts remaining as accrued expenses at
December 31, 2000, are as follows:

<TABLE>
<CAPTION>
                                                    Incurred       Remaining
                                      Total         Through        Accrual at
                                  Merger-Related  December 31,    December 31,
                                     Expenses         2000            2000
                                    ----------     ---------       ---------
                                                 (in thousands)
<S>                                 <C>              <C>              <C>
Professional fees                   $  569           $  554           $   15
Investment banking fees                558              558             --
Contract termination costs             467              467             --
ESOP and restricted stock
  plan termination costs               385              385             --
Data processing conversion fees        209              209             --
Severance payments                     161              124               37
Other merger expenses                  447              447             --
                                    ------           ------           ------
     Total                          $2,796           $2,744           $   52
                                    ======           ======           ======
</TABLE>

     For purposes of preparing the 1999 consolidated balance sheet, the year-end
for Carolina Fincorp was conformed from a June 30 year-end to the December 31
year-end of the Corporation. In preparing other consolidated financial
statements for 1999 and prior years and for the consolidated balance sheets
before December 31, 1999, the results of operations for Carolina Fincorp are
included based on the June 30 year-end. The net results of operations for
Carolina Fincorp for the six months ended December 31, 1999 are included as a
conforming adjustment in preparing the consolidated statement of shareholders'
equity and comprehensive income and consolidated statement of cash flows for the
year ended December 31, 1999. The equity adjustment to conform fiscal periods
for the consolidated statement of shareholders' equity and comprehensive income
consisted of the following for the operations of Carolina Fincorp for the six
months ended December 31, 1999 (in thousands):

<TABLE>
<S>                                                                  <C>
    Net income                                                       $ 476
    Cash dividends declared                                           (202)
    ESOP and restricted stock plan transactions                        128
    Unrealized securities losses, net of income taxes                  (20)
                                                                     ------
        Equity adjustment to conform fiscal periods                  $ 382
                                                                     ======
</TABLE>
<PAGE>

     Separate financial information for the pooled entities for the years ended
December 31, 1999 and 1998 is as follows:


<TABLE>
<CAPTION>
                                   FNB        Carolina
                                   Corp.       Fincorp     Combined
                                ----------    ---------    ---------
                                           (in thousands)
<S>                              <C>          <C>          <C>
1999
  Total assets                   $396,067     $121,401     $517,468
  Total revenues                   30,734        9,156       39,890
  Net interest income              15,497        4,122       19,619
  Net income                        4,657          933        5,590

  Net income per common share:
    Basic                            1.27          .54         1.11
    Diluted                          1.23          .54         1.09

1998
  Total assets                   $356,623     $115,565     $472,188
  Total revenues                   29,615        9,252       38,867
  Net interest income              14,820        4,578       19,398
  Net income                        4,562        1,069        5,631

  Net income per common share:
    Basic                            1.25          .61         1.12
    Diluted                          1.20          .61         1.09
</TABLE>

<PAGE>

Note 3 - Investment Securities


     Summaries of the amortized cost and estimated fair value of investment
securities and the related gross unrealized gains and losses are presented
below:

<TABLE>
<CAPTION>
                                                               Gross        Gross         Estimated
                                               Amortized     Unrealized   Unrealized        Fair
                                                 Cost          Gains        Losses          Value
                                               ---------     ----------    ----------     ----------
                                                    (in thousands)
<S>                                             <C>            <C>            <C>            <C>
Available For Sale
   December 31, 2000
     U.S. Treasury                              $   749        $     4        $  --          $   753
     U.S. Government agencies and
       corporations                              69,854             67            649         69,272
     Equity securities                            2,969             29           --            2,998
                                                -------        -------        -------        -------
                  Total                         $73,572        $   100        $   649        $73,023
                                                =======        =======        =======        =======
   December 31, 1999
     U.S. Treasury                              $ 1,000        $     8        $  --          $ 1,008
     U.S. Government agencies and
       corporations                              60,855           --            3,018         57,837
     Equity securities                            2,208             12           --            2,220
                                                -------        -------        -------        -------
                  Total                         $64,063        $    20        $ 3,018        $61,065
                                                =======        =======        =======        =======

Held To Maturity
   December 31, 2000
     U.S. Government agencies and
       corporations                             $36,089        $  --          $   330        $35,759
     Mortgage-backed securities                     483              5           --              488
     State, county and municipal                 19,735            622              5         20,352
     Other debt securities                        3,054             78              4          3,128
                                                -------        -------        -------        -------
                  Total                         $59,361        $   705        $   339        $59,727
                                                =======        =======        =======        =======

   December 31, 1999
     U.S. Government agencies and
       corporations                             $37,089        $  --          $ 1,656        $35,433
     Mortgage-backed securities                     594              4              3            595
     State, county and municipal                 20,048            156            239         19,965
     Other debt securities                          990           --               30            960
                                                -------        -------        -------        -------
                  Total                         $58,721        $   160        $ 1,928        $56,953
                                                =======        =======        =======        =======
</TABLE>

     The amortized cost and estimated fair value of investment securities at
December 31, 2000, by contractual maturity, are shown below. Actual maturities
may differ from contractual maturities because issuers may have the right to
prepay obligations with or without prepayment penalties.

<TABLE>
<CAPTION>
                                                   Available For Sale          Held To Maturity
                                                ------------------------  --------------------------
                                                              Estimated                     Estimated
                                                Amortized       Fair         Amortized         Fair
                                                   Cost         Value           Cost          Value
                                                -----------   -----------   -----------    -----------
                                                                     (in thousands)
<S>                                               <C>            <C>            <C>            <C>
Due in one year or less                           $ 3,999        $ 3,993        $ 4,591        $ 4,589
Due after one year through five years              26,221         25,975         33,172         32,978
Due after five years through ten years             38,883         38,563         12,529         12,766
Due after ten years                                 1,500          1,494          8,586          8,906
                                                  -------        -------        -------        -------
               Total                               70,603         70,025         58,878         59,239
Mortgage-backed securities                           --             --              483            488
Equity securities                                   2,969          2,998           --             --
                                                  -------        -------        -------        -------
               Total investment securities        $73,572        $73,023        $59,361        $59,727
                                                  =======        =======        =======        =======
</TABLE>

     Debt securities with an estimated fair value of $68,433,000 were pledged to
secure public funds and trust funds on deposit at December 31, 2000. Debt
securities with an estimated fair value of $18,800,000 were pledged to secure
retail repurchase agreements at December 31, 2000.

     Proceeds from the sales of investment securities classified as
available-for-sale amounted to $77,000 in 2000, $500,000 in 1999 and $1,990,000
in 1998. Gross gains realized on these sales were $76,000 in 2000 and $2,000 in
1998. Gross losses realized on these sales were $1,000 in 1998.

     The Bank, as a member of the Federal Home Loan Bank (the "FHLB") of
Atlanta, is required to own capital stock in the FHLB of Atlanta based generally
upon the balances of residential mortgage loans and FHLB advances. FHLB capital
stock is pledged to secure FHLB advances. No ready market exists for this stock,
and it has no quoted market value. However, redemption of this stock has
historically been at par value. At December 31, 2000 and 1999, the Bank owned a
total of $2,557,000 and $2,055,000, respectively, of FHLB stock.

<PAGE>

Note 4 - Loans

     Major classifications of loans are as follows:

<TABLE>
<CAPTION>
                                          December 31
                                     2000            1999
                                   --------       --------
                                        (in thousands)
<S>                                <C>             <C>
Commercial and agricultural        $160,057        $125,331
Real estate - construction            5,734           5,472
Real estate - mortgage:
  1-4 family residential            165,057         170,577
  Commercial and other               16,050          22,214
Consumer                             25,290          30,340
Leases                               13,679           6,832
                                   --------        --------
Loans held for investment           385,867         360,766
Loans held for sale                   9,870              74
                                   --------        --------
Gross loans                        $395,737        $360,840
                                   ========        ========
</TABLE>

     Loans as presented are reduced by net deferred loan fees of $405,000 and
$427,000 at December 31, 2000 and 1999, respectively. Nonaccrual loans amounted
to $1,478,000 at December 31, 2000 and $1,602,000 at December 31, 1999. Interest
income that would have been recorded on nonaccrual loans for the years ended
December 31, 2000, 1999 and 1998 had they performed in accordance with their
original terms, amounted to approximately $137,000, $153,000 and $63,000,
respectively. Interest income on all such loans included in the results of
operations amounted to approximately $98,000 in 2000, $90,000 in 1999 and
$30,000 in 1998.

     At December 31, 2000, the Bank had impaired loans which totaled $321,000
and were also on nonaccrual status. The related allowance for loan losses on
these loans amounted to $73,000. At December 31, 1999 the Bank had impaired
loans which totaled $1,420,000 and were also on nonaccrual status. The related
allowance for loan losses on these loans amounted to $289,000. The average
carrying value of impaired loans was $330,000 in 2000, $1,508,000 in 1999 and
$467,000 in 1998. Interest income on impaired loans amounted to approximately
$17,000 in 2000, $87,000 in 1999 and was not material in 1998.

     Loans with outstanding balances of $1,173,000 in 2000 and $549,000 in 1999
were transferred from loans to other real estate acquired through foreclosure.
Such loans transferred in 1998 were not material. Other real estate acquired
through loan foreclosures amounted to $163,000 at December 31, 2000 and $423,000
at December 31, 1999 and is included in other assets on the consolidated balance
sheet.

     Loans are primarily made in the region of North Carolina that includes
Chatham, Montgomery, Moore, Randolph, Richmond and Scotland counties. The real
estate loan portfolio can be affected by the condition of the local real estate
markets.

     Loans have been made by the Bank to directors and executive officers of the
Corporation and to the associates of such persons, as defined by the Securities
and Exchange Commission. Such loans were made in the ordinary course of business
on substantially the same terms, including rate and collateral, as those
prevailing at the time in comparable transactions with other borrowers and do
not involve more than normal risk of collectibility. A summary of the activity
during 2000 with respect to related party loans is as follows (in thousands):

<TABLE>
<CAPTION>
<S>                                                  <C>
         Balance, December 31, 1999                  $  9,096
         New loans during 2000                         16,760
         Repayments during 2000                       (17,836)
                                                     --------
         Balance, December 31, 2000                  $  8,020
                                                     ========
</TABLE>

<PAGE>

Note 5 - Allowance for Loan Losses

  Changes in the allowance for loan losses were as follows:

<TABLE>
<CAPTION>
                                                         Years Ended December 31
                                                    -----------------------------------
                                                    2000             1999           1998
                                                  -------         --------       --------
                                                              (in thousands)
<S>                                               <C>             <C>             <C>
Balance at beginning of year                      $ 3,289         $ 2,954         $ 2,694
Provision for losses charged to operations          1,802             511             482
Loans charged off                                    (913)           (357)           (396)
Recoveries on loans previously charged off            253             154             174
Allowance adjustment for loans sold                   (79)           --              --
Adjustment to conform fiscal periods                 --                27            --
                                                  -------         -------         -------
Balance at end of year                            $ 4,352         $ 3,289         $ 2,954
                                                  =======         =======         =======
</TABLE>

<PAGE>

Note 6 - Premises and Equipment

     Premises and equipment are summarized as follows:


<TABLE>
<CAPTION>
                                                            December 31
                                                      ----------------------
                                                        2000           1999
                                                      -------        -------
                                                           (in thousands)
<S>                                                   <C>            <C>
Land                                                  $ 2,342        $ 2,342
Buildings and improvements                              6,672          6,599
Furniture and equipment                                 9,207          8,933
Leasehold improvements                                    434            415
                                                      -------        -------
         Total                                         18,655         18,289
Less accumulated depreciation and amortization          9,059          7,959
                                                      -------        -------
Premises and equipment, net                           $ 9,596        $10,330
                                                      =======        =======
</TABLE>

<PAGE>

Note 7 - Income Taxes

     Income taxes as reported in the consolidated income statement included the
following expense (benefit) components:

<TABLE>
<CAPTION>
                                     2000            1999            1998
                                   -------         -------         -------
                                              (in thousands)
<S>                                <C>             <C>             <C>
Current:
  Federal                          $ 2,106         $ 2,633         $ 2,663
  State                                  6              62             110
                                   -------         -------         -------
         Total                       2,112           2,695           2,773
                                   -------         -------         -------

Deferred - Federal                    (398)           (191)           (205)
                                   -------         -------         -------

         Total income taxes        $ 1,714         $ 2,504         $ 2,568
                                   =======         =======         =======
</TABLE>

     A reconciliation of income tax expense computed at the statutory Federal
income tax rate to actual income tax expense is presented below:

<TABLE>
<CAPTION>
                                                         2000             1999            1998
                                                        -------         -------         -------
                                                                     (in thousands)
<S>                                                     <C>             <C>             <C>
Amount of tax computed using Federal
  statutory tax rate of 34%                             $ 1,778         $ 2,752         $ 2,788
Increases (decreases) resulting from effects of:
  Non-taxable income                                       (329)           (316)           (308)
  Non-deductible merger-related expenses                    331            --              --
  Other                                                     (66)             68              88
                                                        -------         -------         -------

         Total                                          $ 1,714         $ 2,504         $ 2,568
                                                        =======         =======         =======
</TABLE>

     The components of deferred tax assets and liabilities and the tax effect of
each are as follows:

<TABLE>
<CAPTION>
                                                         December 31
                                                     --------------------
                                                      2000          1999
                                                     ------        ------
                                                        (in thousands)
<S>                                                  <C>           <C>
Deferred tax assets:
  Allowance for loan losses                          $1,161        $  798
  Net unrealized securities losses                      186         1,020
  Compensation and benefit plans                        924           794
  Other                                                  80            72
                                                     ------        ------
         Total                                        2,351         2,684
                                                     ------        ------

Deferred tax liabilities:
  Depreciable basis of premises and equipment           337           312
  Prepaid pension cost                                  297           288
  Net deferred loan fees and costs                      225           175
  Other                                                 212           193
                                                     ------        ------
         Total                                        1,071           968
                                                     ------        ------

Net deferred tax asset                               $1,280        $1,716
                                                     ======        ======
</TABLE>

     There is no valuation allowance for deferred tax assets as it is
management's contention that realization of the deferred tax assets is more
likely than not based upon the Corporation's history of taxable income and
estimates of future taxable income.

     The Corporation is permitted under the Internal Revenue Code to deduct an
annual addition to a reserve for bad debts in determining taxable income,
subject to certain limitations. This addition differs significantly from the
provisions for losses for financial reporting purposes. Under generally accepted
accounting principles, the Corporation is not required to provide a deferred tax
liability for the tax effect of additions to the tax bad debt reserve through
1987, the base year. Retained earnings at December 31, 2000, includes
approximately $1,400,000 for which no provision for federal income tax has been
made. These amounts represent allocations of income to bad debt deductions for
tax purposes only. Reductions of such amounts for purposes other than bad debt
losses could create income for tax purposes in certain remote instances, which
would then be subject to the then current corporate income tax rate.

<PAGE>

Note 8 - Time Deposits

  The scheduled maturities of time deposits at December 31, 2000 are as follows
(in thousands):

<TABLE>
<CAPTION>
         Years ending December 31
         -------------------------
<S>                                                                    <C>
            2001                                                       $248,908
            2002                                                         39,063
            2003                                                          8,694
            2004                                                          1,240
            2005                                                          1,819
                                                                       --------
                    Total time deposits                                $299,724
                                                                       ========
</TABLE>

<PAGE>

Note 9 - Short-Term Borrowed Funds

     Funds are borrowed on an overnight basis through retail repurchase
agreements with Bank customers and federal funds purchased from other financial
institutions. Retail repurchase agreement borrowings are collateralized by
securities of the U.S. Treasury and U.S. Government agencies and corporations.

     Information concerning retail repurchase agreements and federal funds
purchased is as follows:

<TABLE>
<CAPTION>
                                                2000                             1999
                                      --------------------------   -----------------------------
                                        Retail          Federal        Retail           Federal
                                      Repurchase         Funds       Repurchase          Funds
                                      Agreements       Purchased     Agreements        Purchased
                                     ------------     -----------   -----------       -----------
                                                         (dollars in thousands)
<S>                                    <C>             <C>             <C>             <C>
Balance at December 31                 $11,201         $ 4,750         $10,667         $ 7,735
Average balance during the year         11,091           1,112          12,971           1,590
Maximum month-end balance               12,580           5,000          14,230           8,200
Weighted average interest rate:
  At December 31                          4.82%           6.84%           3.97%           5.18%
  During the year                         4.64            6.47            3.87            5.38
</TABLE>

Note 10 - Federal Home Loan Bank (FHLB) Advances

     The Bank has a $67,800,000 line of credit with the FHLB, secured by a
blanket collateral agreement on qualifying 1-4 family residential mortgage
loans. At December 31, 2000, FHLB advances under this line amounted to
$15,000,000 and were at interest rates ranging from 4.92% to 5.92%. At December
31, 1999, FHLB advances amounted to $15,000,000 and were at interest rates
ranging from 4.92% to 5.36%.

     The scheduled maturities of FHLB advances at December 31, 2000 are as
follows (in thousands):

<TABLE>
<CAPTION>
         Years ending December 31
         -------------------------
<S>                                                                     <C>
            2009                                                        $ 7,000
            2010                                                          8,000
                                                                        -------
                    Total FHLB Advances                                 $15,000
                                                                        =======
</TABLE>

<PAGE>

Note 11 - Employee Benefit Plans

Pension Plan

     The Corporation has a noncontributory defined benefit pension plan covering
substantially all full-time employees who qualify as to age and length of
service. Benefits are based on the employee's compensation, years of service and
age at retirement. The Corporation's funding policy is to contribute annually to
the plan an amount which is not less than the minimum amount required by the
Employee Retirement Income Security Act of 1974 and not more than the maximum
amount deductible for income tax purposes.

     Information concerning the status of the plan is as follows:

<TABLE>
<CAPTION>
                                                               2000             1999
                                                             -------          -------
                                                               (dollars in thousands)
<S>                                                          <C>              <C>
Change in Benefit Obligation:
     Benefit obligation at beginning of year                 $ 5,742          $ 6,137
     Service cost                                                255              225
     Interest cost                                               428              392
     Net actuarial loss (gain)                                   139             (648)
     Benefits paid                                              (336)            (364)
                                                             -------          -------
     Benefit obligation at end of year                       $ 6,228          $ 5,742
                                                             =======          =======

Change in Plan Assets:
     Fair value of plan assets at beginning of year          $ 7,832          $ 7,231
     Actual return (loss) on plan assets                        (192)             965
     Employer contributions                                       56             --
     Benefits paid                                              (336)            (364)
     Other                                                        88             --
                                                             -------          -------
     Fair value of plan assets at end of year                $ 7,448          $ 7,832
                                                             =======          =======

Prepaid Pension Cost Components:
     Funded status of plan                                   $ 1,220          $ 2,090
     Unrecognized net actuarial gain                            (932)          (1,957)
     Unrecognized prior service cost                             566              673
     Unrecognized transition obligation                           21               43
                                                             -------          -------
     Prepaid pension cost at end of year                     $   875          $   849
                                                             =======          =======

Weighted-Average Plan Assumptions at End of Year:
     Discount rate                                               7.5%             7.5%
     Expected long-term rate of return on plan assets            9.0              9.0
     Rate of increase in compensation levels                     5.5              5.5
</TABLE>

     Net periodic pension cost included the following components:

<TABLE>
<CAPTION>
                                              2000          1999          1998
                                             ------        ------        -------
                                                       (in thousands)
<S>                                          <C>           <C>           <C>
Service cost                                 $ 255         $ 225         $ 177
Interest cost                                  428           392           379
Expected return on plan assets                (697)         (634)         (477)
Amortization of prior service cost             107           107           107
Amortization of transition obligation           21            21            21
Recognized net actuarial gain                  (84)          (16)           (1)
                                             -----         -----         -----
Net periodic pension cost                    $  30         $  95         $ 206
                                             =====         =====         =====
</TABLE>

Supplemental Executive Retirement Plan

     In 2000, the Corporation adopted a noncontributory, nonqualified
supplemental executive retirement plan (the "SERP") covering certain executive
employees. Annual benefits payable

<PAGE>

under the SERP are based on factors similar to those for the pension plan, with
offsets related to amounts payable under the pension plan and social security
benefits.

     Information concerning the status of the plan is as follows:


<TABLE>
<CAPTION>
                                                             2000
                                                             -----
                                                     (dollars in thousands)
<S>                                                          <C>
Change in Benefit Obligation:
     Benefit obligation at beginning of year                 $--
     Service cost                                               20
     Interest cost                                              21
     Amendments                                                288
                                                             -----

     Benefit obligation at end of year                       $ 329
                                                             =====

Change in Plan Assets:
     Fair value of plan assets at beginning of year          $--
     Actual return on plan assets                             --
     Employer contributions                                   --
     Benefits paid                                            --
                                                             -----

     Fair value of plan assets at end of year                $--
                                                             =====

Accrued SERP Cost Components:
     Funded status (liability) of plan                       $(329)
     Unrecognized net actuarial gain                          --
     Unrecognized prior service cost                           256
     Unrecognized transition obligation                       --
                                                             -----

     Accrued SERP cost at end of year                        $ (73)
                                                             =====

Weighted-Average Plan Assumptions at End of Year:
     Discount rate                                             7.5%
     Expected long-term rate of return on plan assets          7.5
</TABLE>

  Net periodic SERP cost included the following components:

                                                              2000
                                                             -----
                                                         (in thousands)

Service cost                                                   $20
Interest cost                                                   21
Expected return on plan assets                                  --
Amortization of prior service cost                              32
Amortization of transition obligation                           --
Recognized net actuarial gain                                   --
                                                             -----
Net periodic pension cost                                      $73
                                                             =====


Other Postretirement Defined Benefit Plans

     The Corporation has postretirement medical and life insurance plans
covering substantially all full-time employees who qualify as to age and length
of service. The medical plan is contributory, with retiree contributions
adjusted whenever medical insurance rates change. The life insurance plan is
noncontributory.

<PAGE>

     Information concerning the plans, which are unfunded, is as follows:

<TABLE>
<CAPTION>
                                                                      2000          1999
                                                                     -----          -----
                                                                    (dollars in thousands)
<S>                                                                  <C>            <C>
Change in Benefit Obligation:
     Benefit obligation at beginning of year                         $ 729          $ 763
     Service cost                                                       29             22
     Interest cost                                                      52             48
     Net actuarial gain                                                (13)           (46)
     Benefits paid                                                     (46)           (58)
                                                                     -----          -----

     Benefit obligation at end of year                               $ 751          $ 729
                                                                     =====          =====

Accrued Postretirement Benefit Cost Components:
     Unrecognized net actuarial gain                                 $(687)         $(652)
     Unrecognized prior service cost                                    49             59
     Unrecognized transition obligation                                243            263
                                                                     -----          -----

     Accrued postretirement benefit cost at end of year              $(395)         $(330)
                                                                     =====          =====

Weighted-Average Plan Assumptions at End of Year:
     Discount rate                                                     7.5%           7.5%
     Annual rate of increase in the cost of medical benefits:
       Current year                                                   10.0           11.0
       Final constant amount                                           6.0            5.0
       Annual decrease                                                 1.0            1.0
</TABLE>

     Increasing or decreasing the assumed medical cost trend rate by one
percentage point would not have a significant effect on either the
postretirement benefit obligation at December 31, 2000 or the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
for the year ended December 31, 2000.

     Net periodic postretirement benefit cost included the following components:

<TABLE>
<CAPTION>
                                                2000        1999        1998
                                                ----        ----        ----
                                                       (in thousands)
<S>                                             <C>         <C>         <C>
Service cost                                    $ 29        $ 22        $ 19
Interest Cost                                     52          48          47
Amortization of prior service cost                10          10          10
Amortization of transition obligation             20          20          20
Recognized net actuarial loss                    --            4           3
                                                ----        ----        ----

Net periodic postretirement benefit cost        $111        $104        $ 99
                                                ====        ====        ====
</TABLE>

Matching Retirement/Savings Plan

     The Corporation has a matching retirement/savings plan which permits
eligible employees to make contributions to the plan up to a specified
percentage of compensation as defined by the plan. A portion of the employee
contributions are matched by the Corporation based on the plan formula. The
matching contributions amounted to $117,000 in 2000, $107,000 in 1999 and
$96,000 in 1998.

     Carolina Fincorp maintained a 401(k) retirement plan. Upon completion of
the merger with Carolina Fincorp in 2000, the plan was rolled into the
Corporation's matching retirement/savings plan. The matching contributions for
the Carolina Fincorp 401(k) retirement plan amounted to $24,000 in 1999 and
$21,000 in 1998.

ESOP and Restricted Stock Plans

     Carolina Fincorp had established an ESOP, or employee stock ownership plan,
for the benefit of all qualified employees. Under the terms of the ESOP, shares
of Carolina Fincorp common stock, for future allocation to plan participants,
were purchased with proceeds from a loan by the parent company with repayments
to be made by the subsidiary bank. Under a restricted stock plan for directors,
officers and employees, newly issued shares of Carolina Fincorp common stock
were awarded to plan participants on a deferred vesting schedule. Compensation
expense related to the ESOP and restricted stock plans amonunted to $115,000 in
2000, $231,000 in 1999 and $648,000 in 1998. Upon the change in contol when the
merger occurred in 2000, the ESOP plan terminated according to its terms and
unvested restricted stock plan shares became fully vested, resulting in $385,000
of merger-related expenses.

<PAGE>

Note 12 - Leases

  Future obligations at December 31, 2000 for minimum rentals under
noncancellable operating lease commitments, primarily relating to premises, are
as follows (in thousands):

<TABLE>
<CAPTION>
         Years ending December 31
         -------------------------
<S>                                                           <C>
            2001                                              $ 79
            2002                                                17
            2003                                                 8
            2004                                                 3
            2005                                                 3
            2006 and later years                                39
                                                              ----
                    Total minimum lease payments              $149
                                                              ====
</TABLE>

     Net rental expense for all operating leases amounted to $87,000 in 2000,
$81,000 in 1999 and $73,000 in 1998. One operating lease for real property
contains a purchase option considered to approximate fair market value.

<PAGE>

Note 13 - Supplementary Income Statement Information

  Significant components of other expense were as follows:

<TABLE>
<CAPTION>
                                                    2000       1999      1998
                                                    ----       ----      ----
                                                        (in thousands)
<S>                                                 <C>        <C>        <C>
         Stationery, printing and supplies          $521       $493       $391
         Advertising and marketing                   392        460        411
</TABLE>

<PAGE>

Note 14 - FNB Corp. (Parent Company) Financial Data

     The Parent Company's principal asset is its investment in the Bank
subsidiary, and its principal source of income is dividends from that
subsidiary.

     The Parent Company's condensed balance sheets as of December 31, 2000 and
1999, and the related condensed statements of income and cash flows for each of
the years in the three-year period ended December 31, 2000 are as follows:

Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                                       December 31
                                                                                   -------------------
                                                                                    2000         1999
                                                                                   -------     -------
                                                                                     (in thousands)
<S>                                                                                <C>         <C>
         Assets:
           Cash                                                                    $ 1,718     $ 1,258
           Investment in wholly-owned bank subsidiary                               53,278      50,129
           Other assets                                                                885       1,244
                                                                                   -------     -------

                  Total assets                                                     $55,881     $52,631
                                                                                   =======     =======

         Liabilities and Shareholders' Equity:
           Accrued liabilities                                                     $   759     $   563
           Shareholders' equity                                                     55,122      52,068
                                                                                   -------     -------

                  Total liabilities and shareholders' equity                       $55,881     $52,631
                                                                                   =======     =======
</TABLE>

Condensed Statements of Income

<TABLE>
<CAPTION>
                                                                            Years Ended December 31
                                                                        ----------------------------------
                                                                         2000       1999        1998
                                                                        ------     ------      -----------
                                                                                (in thousands)
<S>                                                                      <C>        <C>         <C>
         Income:
           Dividends from bank subsidiary                                $2,403     $6,554      $1,835
           Other income                                                     139        130         588
                                                                         ------     ------      ------
                           Total income                                   2,542      6,684       2,423
                                                                         ------     ------      ------
         Expenses:
           Operating                                                         89        170         162
           Merger related                                                   146          -           -
                                                                         ------     ------      ------
                           Total expenses                                   235        170         162
                                                                         ------     ------      ------
         Income before income taxes and equity
           in undistributed net income
           of bank subsidiary                                             2,307      6,514       2,261
         Income taxes (benefit)                                              28         (4)        153
                                                                         ------     ------      ------
         Income before equity in undistributed
           net income of bank subsidiary                                  2,279      6,518       2,108

         Equity in undistributed (excess
           of dividends over) net income
           of bank subsidiary                                             1,237       (928)      3,523
                                                                         ------     -------     ------

                           Net income                                    $3,516     $5,590      $5,631
                                                                         ======     ======      ======
</TABLE>

<PAGE>

Condensed Statements of Cash Flows

<TABLE>
<CAPTION>
                                                         Years Ended December 31
                                                ------------------------------------------
                                                  2000             1999             1998
                                                --------         --------         --------
                                                             (in thousands)
<S>                                             <C>              <C>              <C>
Operating activities:
  Net income                                    $  3,516         $  5,590         $  5,631
  Adjustments to reconcile net income to
    net cash provided by operating
    activities:
    Excess of dividends over (equity) in
      undistributed) net income of
      bank subsidiary                             (1,237)             928           (3,523)
    Other, net                                       407             (582)               6
                                                --------         --------         --------

                  Net cash provided by
                    operating activities           2,686            5,936            2,114
                                                --------         --------         --------

Investing activities:
  Proceeds from sales and maturities of
    available-for-securities                          77             --              7,754
  Other, net                                          64               29             (140)
                                                --------         --------         --------

                  Net cash provided by
                    investing activities             141               29            7,614
                                                --------         --------         --------

Financing activities:
  Increase (decrease) in borrowed funds             --             (3,200)           3,200
  Common stock issued                                203               96              241
  Common stock repurchased                          (105)            (327)            --
  Cash dividends and fractional
    shares paid                                   (2,465)          (2,284)          (1,902)
  Return of capital dividend                        --               --            (11,422)
                                                --------         --------         --------

                  Net cash used in
                    financing activities          (2,367)          (5,715)          (9,883)
                                                --------         --------         --------

Net increase (decrease) in cash                      460              250             (155)

Cash at beginning of year                          1,258            1,366            1,521
Adjustment to conform fiscal periods                --               (358)            --
                                                --------         --------         --------

Cash at end of year                             $  1,718         $  1,258         $  1,366
                                                ========         ========         ========

</TABLE>

<PAGE>

Note 15 - Capital Adequacy Requirements

     Certain regulatory requirements restrict the lending of funds by the Bank
to FNB Corp. and the amount of dividends which can be paid to FNB Corp. In 2001,
the maximum amount of dividends the Bank can pay to FNB Corp., without the
approval of the Comptroller of the Currency, is $3,546,000 plus an additional
amount equal to the retained net income in 2001 up to the date of any dividend
declaration.

     The Bank is required to maintain average reserve balances with the Federal
Reserve Bank based on a percentage of deposits. For the reserve maintenance
period in effect at December 31, 2000, the average daily reserve requirement was
$5,540,000.

     FNB Corp. and the Bank are required to comply with capital adequacy
standards established by the Board of Governors of the Federal Reserve System.
In addition, the Bank is required to comply with prompt corrective action
provisions established by the Federal Deposit Insurance Corporation Improvement
Act. Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, there are minimum ratios of capital to risk-weighted assets.
The capital amounts and classifications are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors. Failure to meet minimum capital requirements can initiate certain
mandatory and possibly discretionary actions by regulators that, if undertaken,
could have a material effect on the consolidated financial statements.

     Regulatory capital amounts and ratios are set forth in the table below. The
risk-based capital ratios are determined by expressing allowable capital
amounts, defined in terms of Tier 1, Tier 2 and Tier 3, as a percentage of
risk-weighted assets, which are computed by measuring the relative credit risk
of both the asset categories on the balance sheet and various off-balance sheet
exposures. Tier 1 capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other disallowed
intangible assets. Tier 2 capital, which is limited to the total of Tier 1
capital, includes allowable amounts of subordinated debt, mandatory convertible
debt, preferred stock and the allowance for loan losses. Tier 3 capital,
applicable only to financial institutions subject to certain market risk capital
guidelines, is capital allocated to support the market risk related to a
financial institution's ongoing trading activities. At December 31, 2000, FNB
Corp. and the Bank were not subject to the market risk capital guidelines and,
accordingly, had no Tier 3 capital allocation. Total capital, for risk-based
purposes, consists of the sum of Tier 1, Tier 2 and Tier 3 capital.

     The Bank is well-capitalized under the regulatory framework for prompt
corrective action. To be categorized as well-capitalized, the Bank must meet
minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set
forth in the table below. There are no events or conditions since the
notification that management believes have changed the Bank's category.

<PAGE>

<TABLE>
<CAPTION>

                                                                                                            Minimum Ratios
                                                                                                      ----------------------------
                                                                                                                    To Be Well
                                                                                                         For       Capitalized
                                                       Capital Amount                Ratio             Capital     Under Prompt
                                                   ---------------------      -------------------      Adequacy     Corrective
                                                    2000          1999         2000         1999       Purposes  Action Provisions
                                                   -------       -------      ------       ------      --------  -----------------
                                                                            (dollars in thousands)
<S>                                               <C>            <C>           <C>           <C>           <C>
As of December 31
  Total capital (to risk-weighted assets):
    FNB Corp.                                     $59,833        $57,334       15.15%        16.77%        8.00%         N/A
    Bank                                           57,982         55,377       14.69         16.20         8.00         10.00%

  Tier 1 capital (to risk-weighted assets):
    FNB Corp.                                      55,468         54,040       14.05         15.80         4.00          N/A
    Bank                                           53,617         52,083       13.58         15.24         4.00          6.00%

  Tier 1 capital (to average assets):
    FNB Corp.                                      55,468         54,040        9.92         10.53         4.00          N/A
    Bank                                           53,617         52,083        9.58         10.15         4.00          5.00%

</TABLE>


<PAGE>

Note 16 - Shareholders' Equity

Earnings Per Share (EPS)

  Basic net income per share, or basic EPS, is computed by dividing net income
by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if the
Corporation's dilutive stock options were exercised. The numerator of the basic
EPS computation is the same as the numerator of the diluted EPS computation for
all periods presented. A reconciliation of the denominators of the basic and
diluted EPS computations is as follows:

<TABLE>
<CAPTION>
                                                               2000            1999           1998
                                                             ---------      ---------       ---------
<S>                                                          <C>            <C>             <C>
    Basic EPS denominator - Weighted average number
      of common shares outstanding                           5,035,529      5,022,403       5,043,181
    Dilutive share effect arising from assumed
      exercise of stock options                                 42,408        115,962         144,948
                                                             ---------      ---------       ---------
    Diluted EPS denominator                                  5,077,937      5,138,365       5,188,129
                                                             =========      =========       =========
</TABLE>

     For the years 2000 and 1999, there were 323,601 and 96,364 stock options,
respectively, that were antidilutive since the exercise price exceeded the
average market price. These common stock equivalents were omitted from the
calculations of diluted EPS for their respective years. There were no
antidilutive stock options in 1998.

Stock Options

     The Corporation adopted a stock compensation plan in 1993 that allows for
the granting of incentive and nonqualified stock options to key employees and
directors. Under terms of the plan, options are granted at prices equal to the
fair market value of the common stock on the date of grant. Options become
exercisable after one year in equal, cumulative installments over a five-year
period. No option shall expire later than ten years from the date of grant. A
maximum of 720,000 shares of common stock has been reserved for issuance under
the stock compensation plan. At December 31, 2000, there were 42,850 shares
available under the plan for the granting of additional options.

     The Corporation assumed a stock compensation plan in its merger acquistion
of Carolina Fincorp in 2000. One grant of incentive and nonqualified stock
options was made under the plan in 1999 to key employees and directors at a
price equal to fair market value on the date of grant. No additional grants will
be made under the plan. The total stock options assumed on April 10, 2000, the
date of completion of the merger, amounted to 109,300 shares after adjustment
for the exchange ratio in converting from Carolina Fincorp shares to FNB Corp.
shares. All unvested options of Carolina Fincorp that were outstanding on April
10, 2000 became immediately vested as a result of a change-in-control provision
in the plan that was triggered by the merger. Based on the stock options
outstanding at December 31, 2000, a maximum of 102,348 shares of common stock
has been reserved for issuance under the stock compensation plan.

     The Corporation applies APB Opinion No. 25 in accounting for stock
compensation plans and, accordingly, no compensation cost has been recognized
for stock option grants in the consolidated financial statements. As required by
Statement of Financial Accounting Standards No. 123, disclosures are presented
below for the effect on net income and net income per share that would result
from the use of the fair value based method to measure compensation costs
related to stock option grants in 1995 and subsequent years.

<PAGE>

<TABLE>
<CAPTION>
                                             2000              1999             1998.
                                            ------            ------           ------
                                              (in thousands, except per share data)
<S>                                         <C>               <C>               <C>
         Net Income:
            As reported                     $3,516            $5,590            $5,631
            Pro forma                        3,199             5,346             5,490

         Net Income Per Share:
           Basic:
             As reported                       .70              1.11              1.12
             Pro forma                         .64              1.06              1.09
           Diluted:
             As reported                       .69              1.09              1.09
             Pro forma                         .63              1.04              1.06
</TABLE>

     The weighted-average fair value per share of options granted in 2000, 1999
and 1998 amounted to $4.16, $4.21 and $11.17, respectively. Fair values were
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                               2000              1999             1998
                                             --------          --------         --------
<S>                                            <C>               <C>               <C>
         Risk-free interest rate               5.00%             6.23%             4.70%
         Dividend yield                        3.50              3.20              1.80
         Volatility                           44.00             41.00             44.00
         Expected life                      6 years           6 years           6 years
</TABLE>

     The following is a summary of stock option activity. For comparison
purposes, Carolina Fincorp and the Corporation were consolidated using
conforming fiscal years.

<TABLE>
<CAPTION>
                                                           Years Ended December 31
                                  ---------------------------------------------------------------------
                                           2000                     1999                  1998
                                  -----------------------  ---------------------  ---------------------
                                                Weighted                Weighted               Weighted
                                                Average                 Average                Average
                                                Exercise                Exercise               Exercise
                                  Shares         Price      Shares       Price     Shares       Price
                                  ------         -----      ------       -----     ------       -----
<S>                               <C>           <C>        <C>          <C>        <C>         <C>
    Outstanding at
      beginning of year           567,315       $14.25     396,089      $15.53     340,800     $12.93
    Granted                       222,500        11.74     185,070       11.58      71,000      27.00
    Exercised                     (15,355)        9.24      (7,619)      11.29     (14,711)     10.47
    Forfeited                     (46,315)       16.69      (6,225)      19.22      (1,000)     17.50
                                  -------                   -------                -------

    Outstanding at
         end of year              728,145        13.44     567,315       14.25     396,089      15.53
                                  =======                  =======                 =======

    Options exercisable
         at end of year           371,645        12.69     289,359       12.10     151,639      11.37
                                  =======                  =======                 =======
</TABLE>

<PAGE>

     At December 31, 2000, information concerning stock options outstanding and
exercisable is as follows:

<TABLE>
<CAPTION>
                             Options Outstanding
                             -------------------
                                          Weighted
                                           Average
                                          Remaining
         Exercise                        Contractual       Options
          Price            Shares       Life (Years)     Exercisable
          -----            ------       ------------     -----------
<S>                         <C>             <C>             <C>
         $ 8.13             77,250          3.96            77,250
          12.00             58,700          4.96            58,700
          14.00             72,450          5.96            57,650
          16.00              2,000          6.75             1,200
          17.50             75,600          6.96            45,600
          27.00             59,875          7.96            24,175
           9.82             93,895          8.13            93,895
          14.13             65,875          8.96            13 175
          10.00              1,000          9.58                 -
          11.63              1,000          9.79                 -
          11.75            220,500          9.96                 -
                           -------                         -------
                           728,145          7.71           371,645
                           =======                         =======
</TABLE>

<PAGE>

Note 17 - Commitments

  In the normal course of business, various commitments are outstanding that are
not reflected in the consolidated financial statements. At December 31, 2000, a
summary of significant commitments is as follows:

         Commitments to extend credit                    $82,959,000
         Standby letters of credit                           782,000

  In management's opinion, these commitments will be funded from normal
operations with not more than the normal risk of loss.

<PAGE>
Note 18 - Fair Value of Financial Instruments

     The following methods and assumptions were used to estimate the fair value
for each class of financial instruments.

Cash and Cash Equivalents. For cash on hand, amounts due from banks, and federal
funds sold, the carrying value is considered to be a reasonable estimate of fair
value.

Investment Securities. The fair value of investment securities is based on
quoted market price, if available. If a quoted market price is not available,
fair value is estimated using quoted market prices for similar securities.

Loans. The fair value of 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.

Deposits. The fair value of noninterest-bearing demand deposits and NOW, savings
and money market deposits is the amount payable on demand at the reporting date.
The fair value of time deposits is estimated using the rates currently offered
for deposits of similar remaining maturities.

Borrowed Funds. The carrying value of retail repurchase agreements and federal
funds purchased is considered to be a reasonable estimate of fair value. The
fair value of Federal Home Loan Bank advances is estimated using the rates
currently offered for advances of similar remaining maturities.

Commitments. The fair value of commitments to extend credit is considered to
approximate carrying value, since the large majority of these commitments would
result in loans that have variable rates and/or relatively short terms to
maturity. For other commitments, generally of a short-term nature, the carrying
value is considered to be a reasonable estimate of fair value. The various
commitment items are disclosed in Note 17.

         The estimated fair values of financial instruments are as follows:

<TABLE>
<CAPTION>
                                                   December 31, 2000            December 31, 1999
                                                 ----------------------       ----------------------
                                                               Estimated                   Estimated
                                                  Carrying       Fair         Carrying       Fair
                                                   Value        Value           Value        Value
                                                 --------      --------       --------      --------
                                                                    (in thousands)
<S>                                             <C>            <C>            <C>           <C>
  Financial Assets
         Cash and cash equivalents              $ 14,202       $ 14,202       $ 21,923      $ 21,923

         Investment securities:
           Available for sale                     73,023         73,023         61,065        61,065

           Held to maturity                       59,361         59,727         58,721        56,953

         Net loans                               391,385        385,698        357,551       349,823

  Financial Liabilities
         Deposits                                472,448        474,656        427,010       428,231

         Retail repurchase agreements             11,201         11,201         10,667        10,667

         Federal Home Loan Bank advances          15,000         15,219         15,000        13,994

         Federal funds purchased                   4,750          4,750          7,735         7,735
</TABLE>

     The fair value estimates are made at a specific point in time based on
relevant market and other information about the financial instruments. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Corporation's entire holdings of a particular financial
instrument nor are potential taxes and other expenses that would be considered
in an actual sale considered. Because no market exists for a significant portion
of the Corporation's financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and such
other factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect the
estimates. In addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in the estimates.
<PAGE>

                                   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, as of March 23, 2001.

                                                FNB Corp.
                                                (Registrant)


                                       By:      /s/ Michael C. Miller
                                                ------------------------------
                                                Michael C. Miller
                                                Chairman and President

         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 indicated, as of March 23, 2001.
<TABLE>
<CAPTION>

         Signature                                                              Title
         ---------                                                              -----
<S>                                                                             <C>
/s/ Michael C. Miller                                                  Chairman and President
------------------------------------
Michael C. Miller


/s/ Jerry A. Little                                                    Treasurer and Secretary
------------------------------------                                   (Principal Financial and
Jerry A. Little                                                        Accounting Officer)

/s/ James M. Campbell, Jr.                                             Director
---------------------------
James M. Campbell, Jr.


/s/ R. Larry Campbell                                                  Director
---------------------------
R. Larry Campbell


/s/ Darrell L. Frye                                                    Director
------------------------------------
Darrell L. Frye


/s/ Wilbert L. Hancock                                                 Director
------------------------------------
Wilbert L. Hancock


/s/ Thomas A. Jordan                                                   Director
------------------------------------
Thomas A. Jordan
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                                                                       <C>
/s/ Cooper M. McLaurin                                                 Director
---------------------------
Cooper M. McLaurin


/s/ R. Reynolds Neely, Jr.                                             Director
---------------------------
R. Reynolds Neely, Jr.


/s/ Richard K. Pugh                                                    Director
------------------------------------
Richard K. Pugh


/s/ J. M. Ramsay III                                                   Director
------------------------------------
J. M. Ramsay III


/s/ Charles W. Stout, M.D.                                             Director
---------------------------
Charles W. Stout, M.D.


/s/ Earlene V. Ward                                                    Director
------------------------------------
Earlene V. Ward

</TABLE>
<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit No.                                          Description of Exhibit
-----------                                          ----------------------
<S> <C>                                 <C>
    3.10                            Articles of Incorporation of the Registrant, incorporated herein by
                                    reference to Exhibit 3.1 to the Registrant's Form S-14 Registration
                                    Statement (No. 2-96498) filed March 16, 1985.

    3.11                            Articles of Amendment to Articles of Incorporation of the Registrant,
                                    adopted May 10, 1988, incorporated herein by reference to Exhibit
                                    19.10 to the Registrant's Form 10-Q Quarterly Report for the quarter
                                    ended June 30, 1988.

    3.12                            Articles of Amendment to Articles of Incorporation of the Registrant,
                                    adopted May 12, 1998, incorporated herein by reference to Exhibit 3.12 to the
                                    Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 1998.

    3.20                            Amended and Restated Bylaws of the Registrant, adopted May 21, 1998,
                                    incorporated herein by reference to Exhibit 3.20 to the Registrant's
                                    Form 10-Q Quarterly Report for the quarter ended June 30, 1998.

    4                               Specimen of Registrant's Common Stock Certificate, incorporated
                                    herein by reference to Exhibit 4 to Amendment No. 1 to the Registrant's
                                    Form S-14 Registration Statement (No. 2-96498) filed April 19, 1985.

   10.10*                           Form of Split Dollar Insurance Agreement dated as of November 1, 1987
                                    between First National Bank and Trust Company and certain of its key
                                    employees and directors, incorporated herein by reference to Exhibit
                                    19.20 to the Registrant's Form 10-Q Quarterly Report for the quarter
                                    ended June 30, 1988.

   10.11*                           Form of Amendment to Split Dollar Insurance Agreement dated as of
                                    November 1, 1994 between First National Bank and Trust Company
                                    and certain of its key employees and directors, incorporated herein by
                                    reference to Exhibit 10.11 to the Registrant's Form 10-KSB Annual
                                    Report for the fiscal year ended December 31, 1994.

   10.20*                           Stock Compensation Plan as amended effective May 12, 1998, incorporated
                                    herein by reference to Exhibit 10.30 to the Registrant's Form 10-Q
                                    Quarterly Report for the quarter ended June 30, 1998.

   10.21*                           Form of Incentive Stock Option Agreement between FNB Corp. and certain of
                                    its key employees, pursuant to the Registrant's Stock Compensation Plan,
                                    incorporated herein by reference to Exhibit 10.31 to the Registrant's
                                    Form 10-KSB Annual Report for the fiscal year ended December 31, 1994.

   10.22*                           Form of Nonqualified Stock Option Agreement between FNB Corp. and certain
                                    of its directors, pursuant to the Registrant's Stock Compensation

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                                     <C>

                                    Plan, incorporated herein by reference to Exhibit 10.32 to the Registrant's
                                    Form 10-KSB Annual Report for the fiscal year ended December 31, 1994.

   10.30*                           Employment Agreement dated as of December 27, 1995 between
                                    First National Bank and Trust Company and Michael C. Miller,
                                    incorporated herein by reference to Exhibit 10.50 to the Registrant's
                                    Form 10-KSB Annual Report for the fiscal year ended December 31, 1995.

   10.31*                           Carolina Fincorp, Inc. Stock Option Plan (assumed by the Registrant on April
                                    10, 2000), incorporated herein by reference to Exhibit 99.1 to the
                                    Registrant's Registration Statement on Form S-8 (File No. 333-54702).

   10.32*                           Employment Agreement dated as of April 10, 2000 between
                                    First National Bank and Trust Company and R. Larry Campbell.

   21                               Subsidiaries of the Registrant.

   23                               Consent of Independent Auditors.
----------------
</TABLE>

*Management contract, or compensatory plan or arrangement.