UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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


                                    FORM 10-Q


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

                  For the quarterly period ended June 30, 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)


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
                                      ---      ---

The registrant had 5,050,336 shares of $2.50 par value common stock outstanding
at August 11, 2000.
<PAGE>
                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                            FNB Corp. and Subsidiary

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                         June 30,                     December 31,
                                                              -------------------------------
                                                                 2000               1999               1999
                                                              ------------       ------------      -------------
                                                                      (in thousands, except share data)
<S>                                                           <C>                <C>               <C>
ASSETS
Cash and due from banks                                       $    14,833        $    18,065       $     18,808
Interest-bearing bank accounts                                        650              7,216              3,115
Federal funds sold                                                    160                  -                  -
Investment securities:
     Available for sale, at estimated fair value
          (amortized cost of $65,822, $68,379 and $64,063)         62,695             66,487             61,065
     Held to maturity (estimated fair value of
          $55,721, $56,321 and $56,964)                            57,498             57,128             58,721
Loans                                                             387,193            326,620            361,179
     Less:    Allowance for loan losses                            (4,012)            (3,049)            (3,289)
                                                              ------------       ------------      -------------
                     Net loans                                    383,181            323,571            357,890
                                                              ------------       ------------      -------------
Premises and equipment, net                                         9,882             10,131             10,103
Other assets                                                        9,395              6,904              7,766
                                                              ------------       ------------      -------------

                     Total Assets                             $   538,294        $   489,502       $    517,468
                                                              ============       ============      =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
     Noninterest-bearing demand deposits                      $    48,139        $    44,910       $     43,334
     Interest-bearing deposits:
          NOW, savings and money market deposits                  123,604            123,860            127,819
          Time deposits of $100,000 or more                        90,267             70,965             86,818
          Other time deposits                                     188,991            165,909            169,039
                                                              ------------       ------------      -------------
                     Total deposits                               451,001            405,644            427,010
Retail repurchase agreements                                       10,283             13,482             10,667
Federal Home Loan Bank advances                                    15,000              7,000             15,000
Federal funds purchased                                             4,400              7,825              7,735
Other liabilities                                                   5,967              4,567              4,988
                                                              ------------       ------------      -------------
                     Total Liabilities                            486,651            438,518            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
          shares - 5,046,386, 5,164,206 and 5,139,520              12,616             12,911             12,849
     Surplus                                                        2,736              4,228              4,131
     Retained earnings                                             38,355             37,509             39,158
     ESOP and MRP plans                                                 -             (2,415)            (2,092)
     Accumulated other comprehensive income:
          Net unrealized securities gains (losses)                 (2,064)            (1,249)            (1,978)
                                                              ------------       ------------      -------------
                     Total Shareholders' Equity                    51,643             50,984             52,068
                                                              ------------       ------------      -------------
                     Total Liabilities and
                            Shareholders' Equity              $   538,294        $   489,502       $    517,468
                                                              ============       ============      =============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       1
<PAGE>
                            FNB Corp. and Subsidiary

                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                    Three Months Ended                    Six Months Ended
                                                                         June 30,                             June 30,
                                                              -------------------------------      --------------------------------
                                                                 2000               1999               2000               1999
                                                              ------------       ------------      -------------      -------------
                                                                             (in thousands, except per share data)
<S>                                                           <C>               <C>                <C>                <C>
Interest Income:
     Interest and fees on loans                               $     8,391       $      6,875       $     16,289        $    13,658
     Interest and dividends on investment securities:
          Taxable income                                            1,570              1,568              3,131              3,173
          Non-taxable income                                          244                248                493                503
     Other interest income                                            125                104                231                182
                                                              ------------       ------------      -------------      -------------
                    Total interest income                          10,330              8,795             20,144             17,516
                                                              ------------       ------------      -------------      -------------

Interest Expense:
     Deposits                                                       4,657              3,716              8,948              7,427
     Retail repurchase agreements                                     127                129                240                240
     Federal Home Loan Bank advances                                  202                 87                405                149
     Federal funds purchased                                           27                 12                 52                 29
                                                              ------------       ------------      -------------      -------------
                    Total interest expense                          5,013              3,944              9,645              7,845
                                                              ------------       ------------      -------------      -------------

Net Interest Income                                                 5,317              4,851             10,499              9,671
     Provision for loan losses                                        835                119                992                218
                                                              ------------       ------------      -------------      -------------
Net Interest Income After Provision for Loan Losses                 4,482              4,732              9,507              9,453
                                                              ------------       ------------      -------------      -------------

Noninterest Income:
     Service charges on deposit accounts                              553                509              1,100              1,000
     Annuity and brokerage commissions                                141                140                253                275
     Cardholder and merchant services income                          133                114                242                202
     Other service charges, commissions and fees                      154                147                345                311
     Other income                                                     166                117                300                247
                                                              ------------       ------------      -------------      -------------
                    Total noninterest income                        1,147              1,027              2,240              2,035
                                                              ------------       ------------      -------------      -------------

Noninterest Expense:
     Personnel expense                                              2,247              2,055              4,355              3,999
     Net occupancy expense                                            207                199                409                393
     Furniture and equipment expense                                  462                365                916                632
     Data processing services                                         277                235                505                695
     Merger related expenses                                        2,796                  -              2,796                  -
     Other expense                                                    893                847              1,849              1,641
                                                              ------------       ------------      -------------      -------------
                    Total noninterest expense                       6,882              3,701             10,830              7,360
                                                              ------------       ------------      -------------      -------------

Income (Loss) Before Income Taxes                                  (1,253)             2,058                917              4,128
Income taxes (benefit)                                               (278)               646                411              1,292
                                                              ------------       ------------      -------------      -------------

Net Income (Loss)                                             $      (975)            1,412        $        506              2,836
                                                              ============      =============      =============      =============

Net income (loss) per common share:
     Basic                                                    $      (.19)      $        .28       $        .10       $        .56
     Diluted                                                         (.19)               .27                .10                .55
                                                              ============       ============      =============      =============

Weighted average number of shares outstanding:
     Basic                                                      5,027,951          5,030,503          5,017,591          5,041,141
     Diluted                                                    5,027,951          5,159,777          5,075,268          5,178,706
                                                              ============      =============      =============      =============

Cash dividends declared per common share                      $       .12       $        .12       $        .24       $        .24
                                                              ============      =============      =============      =============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       2
<PAGE>
                            FNB Corp. and Subsidiary

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

                Six Months Ended June 30, 2000 and June 30, 1999
<TABLE>
<CAPTION>
                                                                                                              ESOP
                                                       Common Stock                                            and
                                                ---------------------------                   Retained         MRP
                                                   Shares        Amount         Surplus       Earnings        Plans
                                                -------------  ------------   ------------  -------------  ------------
                                                                                   (in thousands, except share data)
<S>                                               <C>         <C>            <C>           <C>            <C>
Balance, December 31, 1998                         5,160,756   $    12,902    $     4,205   $   35,763     $   (2,531)
Comprehensive income:
     Net income                                            -             -              -        2,836              -
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $671           -             -              -            -              -

     Total comprehensive income                            -             -              -            -              -

Cash dividends declared                                    -             -              -       (1,090)             -
ESOP and MRP plan transactions                             -             -             (6)           -            116
Common stock issued through:
     Dividend reinvestment plan                            -             -              -            -              -
     Stock option plan                                 3,450             9             29            -              -
                                                 -----------   -----------    -----------   ----------     ----------

Balance, June 30, 1999                             5,164,206   $    12,911    $     4,228   $   37,509     $   (2,415)
                                                 ===========   ===========    ===========   ==========     ==========


Balance, December 31, 1999                         5,139,520   $    12,849    $     4,131   $   39,158     $   (2,092)
Comprehensive income:
     Net income                                            -             -              -          506              -
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $43            -             -              -            -              -

     Total comprehensive income                            -             -              -            -              -

Cash dividends declared                                    -             -              -       (1,309)             -
Cash paid for fractional shares in merger               (122)            -             (1)           -              -
ESOP and MRP plan transactions:
     Termination of plans                            (93,113)         (233)        (1,342)           -          1,960
     Other transactions                                    -             -            (17)           -            132
Common stock issued through:
     Dividend reinvestment plan                        4,701            12             39            -              -
     Stock option plan                                 2,100             5             14            -              -
Common stock repurchased                              (6,700)          (17)           (88)           -              -
                                                 -----------   -----------    -----------   ----------     ----------

Balance, June 30, 2000                             5,046,386   $    12,616    $     2,736   $   38,355     $        -
                                                 ===========   ===========    ===========   ==========     ==========

<CAPTION>

                                                    Accumulated
                                                       Other
                                                   Comprehensive
                                                       Income           Total
                                                  --------------     ------------
<S>                                               <C>                <C>
Balance, December 31, 1998                        $        51        $   50,390
Comprehensive income:
     Net income                                             -             2,836
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $671       (1,300)           (1,300)
                                                                     ------------
     Total comprehensive income                             -             1,536
                                                                     ------------
Cash dividends declared                                     -            (1,090)
ESOP and MRP plan transactions                              -               110
Common stock issued through:
     Dividend reinvestment plan                             -                 -
     Stock option plan                                      -                38
                                                  -----------        ------------

Balance, June 30, 1999                            $    (1,249)       $   50,984
                                                  ===========        ============


Balance, December 31, 1999                        $    (1,978)       $   52,068
Comprehensive income:
     Net income                                             -               506
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $43           (86)              (86)
                                                                     ------------
     Total comprehensive income                             -               420
                                                                     ------------
Cash dividends declared                                     -            (1,309)
Cash paid for fractional shares in merger                   -                (1)
ESOP and MRP plan transactions:
     Termination of plans                                   -               385
     Other transactions                                     -               115
Common stock issued through:
     Dividend reinvestment plan                             -                51
     Stock option plan                                      -                19
Common stock repurchased                                    -              (105)
                                                  -----------        ------------

Balance, June 30, 2000                            $    (2,064)       $   51,643
                                                  ===========        ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
                            FNB Corp. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                            June 30,
                                                                 -------------------------------
                                                                    2000               1999
                                                                 ------------      -------------
                                                                         (in thousands)
Operating Activities:
<S>                                                              <C>               <C>
     Net income                                                  $        506      $      2,836
     Adjustments to reconcile net income to net
          cash provided by operating activities:
          Depreciation and amortization of premises and equipment         763               622
          Provision for loan losses                                       992               218
          Deferred income taxes                                          (208)              (20)
          Deferred loan fees and costs, net                               (29)               85
          Premium amortization and discount accretion
                 of investment securities, net                             28               (42)
          ESOP and MRP plan expenses                                      500                 9
          Amortization of intangibles                                       7               109
          Net decrease (increase) in loans held for sale                 (399)            4,895
          Increase in other assets                                       (979)             (123)
          Increase (decrease) in other liabilities                        984              (676)
                                                                 ------------      -------------
                    Net Cash Provided by Operating Activities           2,165             7,913
                                                                 ------------      -------------
Investing Activities:
     Available-for-sale securities:
          Proceeds from maturities and calls                                -            11,430
          Purchases                                                    (1,759)          (23,829)
     Held-to-maturity securities:
          Proceeds from maturities and calls                            1,852            12,335
          Purchases                                                      (655)           (4,000)
     Net increase in loans                                            (26,011)          (16,762)
     Purchases of premises and equipment                                 (705)           (1,485)
     Other, net                                                          (151)               82
                                                                 ------------      -------------
                    Net Cash Used in Investing Activities             (27,429)          (22,229)
                                                                 ------------      -------------
Financing Activities:
     Net increase in deposits                                           23,991            5,426
     Increase (decrease) in retail repurchase agreements                 (384)            1,998
     Increase in Federal Home Loan Bank advances                            -             7,000
     Increase (decrease) in federal funds purchased                    (3,335)            3,080
     Common stock issued                                                   70                38
     Common stock repurchased                                            (105)                -
     Cash dividends and fractional shares paid                         (1,253)           (1,198)
                                                                 ------------      -------------
                    Net Cash Provided by Financing Activities          18,984            16,344
                                                                 ------------      -------------

Net Increase (Decrease) in Cash and Cash Equivalents                   (6,280)            2,028
Cash and cash equivalents at beginning of period                       21,923            23,253
                                                                 ------------      -------------

Cash and Cash Equivalents at End of Period                       $     15,643      $     25,281
                                                                 =============     =============
Supplemental disclosure of cash flow information:
     Cash paid during the period for:
          Interest                                               $      9,457      $      8,092
          Income taxes                                                  1,507             1,483
</TABLE>
See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                            FNB Corp. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       Basis of Presentation

         FNB Corp. is a one-bank holding company whose wholly-owned subsidiary
         is the First National Bank and Trust Company (the "Bank"). The Bank is
         an independent community bank that offers a complete line of financial
         services, including deposit, loan, 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 accompanying consolidated financial statements, prepared without
         audit, include the accounts of FNB Corp. and the Bank (collectively,
         the "Corporation"). All significant intercompany balances and
         transactions have been eliminated. The results of operations of the
         Corporation and its subsidiary are reviewed as a single enterprise by
         the chief operating decision maker. All prior period financial
         information has been restated to include historical information for a
         company acquired in a transaction accounted for as a pooling of
         interests, as further discussed in Note 3 below.

         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.

         In the opinion of management, the financial information furnished in
         this report includes all adjustments (consisting of normal recurring
         accruals) necessary to a fair statement of the results for the periods
         presented.

2.       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.

3.       Merger Activity

          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. The costs associated
          with the

                                       5
<PAGE>
          merger were recorded as nonrecurring charges in the second quarter of
          2000 and included $2,796,000 of merger-related expenses. 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 these
          consolidated financial statements has been restated to include the
          account balances and results of operations of Carolina Fincorp.

          Separate financial information for the pooled entities for the year
          ended December 31, 1999 is as follows. Income statement information
          for Carolina Fincorp is for its fiscal year ended June 30, 1999.

                               FNB      Carolina
                              Corp.      Fincorp       Combined
                            --------    --------       --------
                                     (in thousands)
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


4.       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>
                                                       Three Months Ended                     Six Months Ended
                                                            June 30,                              June 30,
                                                     ----------------------------      ----------------------------
                                                        2000             1999              2000              1999
                                                     ----------        ----------      ----------        ----------
<S>                                                  <C>               <C>               <C>               <C>
         Basic EPS denominator - Weighted
              average number of common
              shares outstanding                      5,027,951        5,030,503        5,017,591         5,041,141
         Dilutive share effect arising from
              assumed exercise of stock options
              and unvested MRP shares                         -          129,274           57,677           137,565
                                                     ----------        ----------      ----------        ----------

         Diluted EPS denominator                     $5,027,951       $5,159,777       $5,075,268        $5,178,706
                                                     ==========       ===========      ==========        ==========
</TABLE>

                                       6

<PAGE>


         The dilutive share effect arising from assumed exercise of stock
         options and unvested MRP shares, which amounted to 27,433 shares for
         the three months ended June 30, 2000, is not considered when there is a
         net loss.

5.       Loans

         Loans as presented are reduced by net deferred loan fees of $397,000,
         $463,000 and $426,000 at June 30, 2000, June 30, 1999 and December 31,
         1999, respectively.


6.       Allowance for Loan Losses

         Changes in the allowance for loan losses were as follows:

                                                Six Months Ended
                                                     June 30,
                                                -----------------
                                                 2000       1999
                                                ------      -----
                                                   (in thousands)
Balance at beginning of period                  $3,289      $2,954
Charge-offs                                        382         191
Recoveries                                         113          68
                                                ------      ------
     Net loan charge-offs                          269         123
Provision for loan losses                          992         218
                                                ------      ------
Balance at end of period                        $4,012      $3,049
                                                ======      ======



7.       Supplementary Income Statement Information

         Significant components of other expense were as follows:
<TABLE>
<CAPTION>
                                                           Three Months Ended                Six Months Ended
                                                                June 30,                          June 30,
                                                     ---------------------------        ----------------------------
                                                        2000             1999              2000              1999
                                                     ----------        ---------        ----------        ----------
                                                                              (in thousands)
<S>                                                  <C>               <C>               <C>               <C>
         Stationery, printing and supplies                 $129              $120             $240              $245
         Advertising and marketing                          134                89              269               166
</TABLE>

                                       7

<PAGE>
Item 2. 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 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. The costs associated with the merger were
recorded as nonrecurring charges in the second quarter of 2000 and included
$2,796,000 of merger-related expenses. 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 $506,000 in the first six months of 2000, an
82.2% decrease from the same period in 1999. Basic earnings per share decreased
from $.56 to $.10 in comparing these six-month periods and diluted earnings per
share decreased from $.55 to $.10. For the 2000 second quarter, there was a net
loss of $975,000 compared to net income of $1,412,000 in the 1999 second quarter
with basic and diluted loss per share amounts of $.19 each in 2000 compared to
basic and diluted earnings per share amounts in 1999 of $.28 and $.27,
respectively. Total assets were $538,294,000 at June 30, 2000, up 10.0% from
June 30, 1999 and 4.0% from December 31, 1999. Loans amounted to $387,193,000 at
June 30, 2000, increasing 18.5% from June 30, 1999 and 7.2% from December 31,
1999. Total deposits grew 11.2% from June 30, 1999 and 5.6% from December 31,
1999 to $451,001,000 at June 30, 2000.

         Excluding $2,338,000 in after-tax nonrecurring charges associated with
the merger, which includes the $450,000 provision for loan losses discussed
above, net income for the six months ended June 30, 2000 amounted to $2,844,000,
a 0.3% increase over the same period in 1999, with basic and diluted earnings
per share amounts of $.57 and $.56, respectively. For the second quarter of
2000, excluding the nonrecurring merger charges, net income was $1,363,000, a
3.5% decrease from the 1999 second quarter, with basic and diluted earnings per
share amounts of $.27 each.

Earnings Review

         After exclusion of after-tax nonrecurring charges of $2,338,000
associated with the merger with Carolina Fincorp as discussed in the "Overview",
the Corporation's net income increased $8,000 or 0.3% in


                                        8

<PAGE>

the first six months of 2000 compared to the same period of 1999 and decreased
$49,000 or 3.5% in comparing second quarter periods. Earnings were positively
impacted in the first six months of 2000 by increases of $828,000 or 8.6% in net
interest income and $205,000 in noninterest income. These gains were
significantly offset, however, by an increase of $674,000 in noninterest expense
and by an increase of $324,000 in the provision for loan losses. The positive
impact on 2000 second quarter earnings from increases of $466,000 or 9.6% in net
interest income and $120,000 in noninterest income was more than offset by the
effect of a $385,000 increase in noninterest expense and $266,000 increase in
the provision for loan losses. Results for both the first six months and second
quarter of 2000 were negatively affected by a special group medical insurance
assessment of $176,000, the effect of which was only partially offset by a
$76,000 gain on the sale of an investment.

         On an annualized basis and excluding the nonrecurring charges
associated with the merger, return on average assets decreased from 1.19% in the
first six months of 1999 to 1.07% in the first six months of 2000. Return on
average shareholders' equity decreased from 11.07% to 10.71% in comparing the
same periods. In comparing second quarter periods, return on average assets
decreased from 1.17% to 1.01% and return on average shareholders' equity
decreased from 10.96% to 10.18%.

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 $10,499,000 in the first six months of 2000
compared to $9,671,000 in the same period of 1999. This increase of $828,000 or
8.6% resulted primarily from a 12.5% 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 4.54% in the first six months of
1999 to 4.36% in the same period of 2000. In comparing second quarter periods,
net interest income increased $466,000 or 9.6% reflecting a 13.1% increase in
average earning assets and a decline in the net interest margin from 4.50% to
4.34%. On a taxable equivalent basis, the increases in net interest income in
the first six months and second quarter of 2000 were $815,000 and $464,000,
respectively, reflecting changes in the relative mix of taxable and non-taxable
earning assets.

         Table 1 on page 18 and Table 2 on page 19 set 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. Changes in net interest income on a taxable
equivalent basis, as measured by volume and rate variances, are also analyzed in
Tables 1 and 2. Volume refers to the average dollar level of earning assets and
interest-bearing liabilities.

                                        9

<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 prime rate of interest has been relatively stable in recent years,
averaging 7.99%, 8.37% and 8.44% in 1999, 1998 and 1997, respectively. This
general stability has tended to apply to the interest rates both earned and paid
by the Bank. During the last three months of 1998, however, a significant change
occurred in the prime rate when the Federal Reserve took action on the level of
interest rates 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 total yield on 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 increased it
from 7.75% to 8.50%, thereby effectively reversing the rate reductions that
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 interest spread.

         Following the reductions in late 1998, the prime rate averaged 7.75% in
the first six months of 1999. The subsequent increases resulted in an average
prime rate of 8.94% in the first six months of 2000. The prime rate averaged
9.21% in the second quarter of 2000 compared to 7.75% in the 1999 second
quarter. The net interest spread, in comparing six-month periods, declined by 20
basis points from 3.85% in 1999 to 3.65% 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 12 basis points from 8.07% in
1999 to 8.19% in 2000, while the cost of funds increased by 32 basis points from
4.22% to 4.54%. In comparing second quarter periods, the net interest spread
declined by 22 basis points from 3.83% to 3.61%, as the yield on earning assets
increased by 27 basis points while the cost of funds increased by 49 basis
points.


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 period'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 provisions of
$992,000 for the first six months and $835,000 for the second quarter compared
to 1999 provisions of $218,000 and $119,000, respectively. Approximately
$450,000 of the provision for the second quarter of 2000 was merger related as
discussed below, while the remainder resulted from additional loan writedowns
and charge-offs taken in the same quarter as completion of the merger
transaction.

                                        10

<PAGE>

         The allowance for loan losses, as a percentage of loans outstanding and
reflecting the restatement of historical information for the merger, amounted to
1.04% at June 30, 2000, 0.93% at June 30, 1999 and 0.91% at December 31, 1999.
On a pre-merger basis, the allowance percentage was 1.07% at June 30, 1999 and
1.04% at December 31, 1999. The increase in the allowance percentage on the
restated basis at June 30, 2000 resulted primarily from the provision component
of approximately $450,000 for the second quarter of 2000 to align the credit
risk metholodogies of FNB Corp. and Carolina Fincorp.

Noninterest Income

         Noninterest income for the first six months and second quarter of 2000
increased $205,000 or 10.1% and $120,000 or 11.7%, respectively, compared to the
same periods in 1999, reflecting in part the general increase in the volume of
business. The increase in service charges on deposit accounts in comparing
six-month periods was primarily due to the selected increases in service charge
rates that became effective in the 1999 first quarter and to improved fee
collection efforts, the latter factor significantly relating to the increase in
comparing second quarter periods. Other income was higher in the first six
months and second quarter of 2000 due largely to a $76,000 gain on the sale of
an investment. Reflecting reduced mortgage loan activity in 2000, gains on loan
sales, included in other income, were lower than in 1999.

Noninterest Expense

         Excluding merger-related expenses of $2,796,000 in 2000, noninterest
expense was $674,000 or 9.2% higher in the first six months of 2000 compared to
the same period in 1999 and for the second quarter was $385,000 or 10.4% higher,
due largely to increased personnel expense, a higher level of advertising and
marketing 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 for Richmond Savings
continued 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.
Advertising and marketing expense, included in other expense, increased $103,000
in the first six months of 2000 and $45,000 in the second quarter due primarily
to an increased level of expenditures related to the major marketing plan
centered around the "YES YOU CAN, YES WE CAN(R)" program.

         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.

                                       11

<PAGE>

         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 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.

Income Taxes

         The effective income tax rate increased from 31.3% in the first six
months of 1999 to 44.8% in the same period of 2000 due principally to the
expected nondeductibility of certain merger-related expenses.

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 $64,500,000
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.

Asset/Liability Management and Interest Rate Senstivity

         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 June 30, 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.

                                       12

<PAGE>

Included in interest-bearing liabilities subject to rate changes within 90 days
is a portion of the NOW, savings and money market deposits. These types of
deposits historically have not repriced coincidentally with or in the same
proportion as general market indicators.

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 June 30, 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 June 30, 2000, FNB Corp. and the Bank had
total capital ratios of 15.68% and 15.22%, respectively, and Tier 1 capital
ratios of 14.59% and 14.13%.

         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 June 30, 2000, FNB
Corp. and the Bank had leverage capital ratios of 9.88% and 9.57%, 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 June 30, 2000 and, accordingly, is well-capitalized under the regulatory
framework for prompt corrective action.

Balance Sheet Review

         Restated to reflect the merger with Carolina Fincorp as discussed in
the "Overview", total assets at June 30, 2000 were higher than at June 30, 1999
and December 31, 1999 by $48,792,000 or 10.0% and $20,826,000 or 4.0%,
respectively; deposits were ahead by $45,357,000 or 11.2% and $23,991,000 or
5.6%. A portion of the asset growth was funded by advances from the Federal Home
Loan Bank which at June 30, 2000 had increased by $8,000,000 or 114.3% from June
30, 1999 and were unchanged compared to December 31, 1999. The level of funds
provided by retail repurchase agreements at June 30, 2000 had decreased by
$3,199,000 or 23.7% from June 30, 1999 and by $384,000 or 3.6% from December 31,
1999. Average assets increased 11.6% in the first six months of 2000 compared to
the same period in 1999, while average deposits increased 11.3%, the second
quarter increases being 12.1% and 12.2%, respectively.

                                       13

<PAGE>

Investment Securities

         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. During the twelve-month period ended June 30, 2000, when
the growth in loans exceeded that for total assets, the level of investment
securities was reduced $3,422,000 or 2.8%, with a net increase of $407,000 or
0.3% occurring in the first six months of 2000. 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 June 30, 2000.

Loans

         The Corporation's primary source of revenue and largest component of
earning assets is the loan portfolio. Loans increased $60,573,000 or 18.5%
during the twelve-month period ended June 30, 2000. The net loan increase during
the first six months of 2000 was $26,014,000 or 7.2%. Average loans were
$58,832,000 or 16.8% higher in the first six months of 2000 than in the same
period of 1999. The ratio of average loans to average deposits, in comparing
six-month periods increased from 80.0% in 1999 to 84.0% in 2000. The ratio of
loans to deposits at June 30, 2000 was 85.9%.

         The commercial and agricultural loan portfolio has experienced strong
gains during both the twelve-month period ended June 30, 2000 and the first six
months of 2000. The 1-4 family residential mortgage loan portfolio has also
gained significantly during these periods. Lease financing contracts, a new loan
product in 1999, have further added to the balance of the total loan portfolio.
Loan growth and the composition of the loan portfolio are being affected by
management's decision in March 1996 to discontinue the purchase of retail
installment loan contracts from automobile and equipment dealers (see "Business
Development Matters"). The outstanding balance of these loan contracts, which
are primarily included in consumer loans, experienced a net decrease of
$1,254,000 during the twelve-month period ended June 30, 2000. Consequently,
total consumer loans declined during that period.

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.

                                       14

<PAGE>

         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.

         The following table presents an analysis of the changes in the
allowance for loan losses.

                                                      Six Months Ended
                                                          June 30,
                                                      ----------------
                                                       2000      1999
                                                      ------    ------
                                                       (in thousands)

Balance at beginning of period                        $3,289    $2,954
Charge-offs                                              382       191
Recoveries                                               113        68
                                                      ------    ------
         Net loan charge-offs                            269       123
Provision for loan losses                                992       218
                                                      ------    ------
Balance at end of period                              $4,012    $3,049
                                                      ======    ======

         At June 30, 2000, the Bank had impaired loans with one borrower that
totaled $32,000, all of which was on nonaccrual status. Nonperforming loans were
$1,587,000 in total at June 30, 2000, nonaccrual loans and accruing loans past
due 90 days or more amounting to $516,000 and $1,071,000, respectively.

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, largely reflecting the effect of
promotions for premium-rate certificates of deposit, accounted for $42,384,000
of total deposit growth of $45,357,000 during the twelve-month period ended June
30, 2000 and $23,401,000 of total deposit growth of $23,991,000 during the first
six months of 2000. Further, the level of time deposits obtained from
governmental units fluctuates, amounting to $38,306,000, $22,363,000 and
$38,529,000 at June 30, 2000, June 30, 1999 and December 31, 1999, respectively.

Business Development Matters

         As discussed in the "Overview" and in Note 3 to Consolidated Financial
Statements, the Corporation completed a merger in the second quarter of 2000 for
the acquisition of Carolina Fincorp, holding company for Richmond Savings,
headquartered in Rockingham, North Carolina.

         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

                                       15

<PAGE>

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.

         Management decided in March 1996 that the Bank would discontinue the
purchase of retail installment loan contracts from automobile and equipment
dealers, due largely to the declining yields being experienced in this loan
program. Contracts of this nature included in loans at June 30, 2000, June 30,
1999 and December 31, 1999 amounted to $741,000, $1,995,000 and $963,000,
respectively. While there will be no purchases of new contracts, current plans
call for the collection of outstanding loans based on their contractual terms.
The funds previously invested in this loan program are being redeployed, as loan
payments occur, to other loan programs or to the investment securities
portfolio.

Year 2000 Status

         As of the date of this report, the Corporation has not experienced any
material effects related to the Year 2000 readiness problem. Although the
Corporation has not been informed of any material risks associated with the year
2000 problem from third parties, there can be no assurance that the Corporation
will not be impacted in the future. The Corporation will continuously monitor
its business applications and maintain contact with its third-party vendors and
key business partners to resolve any Year 2000 problems that may arise in the
future.

Cautionary Satement for Purpose of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

         The statements contained in this Quarterly Report on Form 10-Q 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) expected cost savings from the merger completed with
Carolina Fincorp

                                       16

<PAGE>

in the second quarter of 2000 may not materialize, (ii) the Corporation may
experience greater than expected deposit attrition, customer loss, or revenue
loss in connection with the merger, (iii) competitive pressure in the banking
industry or in the Corporation's markets may increase significantly, (iv)
changes in the interest rate environment may reduce margins, (v) general
economic conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, credit quality deterioration, (vi)
changes may occur in banking legislation and in the environment, (vii) changes
may occur in general business conditions and inflation and (viii) changes may
occur in the securities markets. Readers should also consider information on
risks and uncertainties contained in the discussions of competition, supervision
and regulation, and effect of governmental policies contained in the
Corporation's most recent Annual Report on Form 10-K.

                                       17



<PAGE>

<TABLE>
<CAPTION>
Table 1
Average Balances and Net Interest Income Analysis


SIX MONTHS ENDED JUNE 30                                      2000                                         1999
                                             ---------------------------------------       --------------------------------------
                                                                          Average                                      Average
                                                            Interest       Rates                         Interest       Rates
                                               Average       Income/      Earned/            Average     Income/       Earned/
                                               Balance       Expense       Paid              Balance     Expense        Paid
                                             ------------  ------------  -----------       ------------ ------------  -----------
                                                              (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                          <C>           <C>                 <C>         <C>          C>                  <C>
Earning Assets
Loans (2) (3)                                $  374,358    $    16,314         8.73 %      $   320,526       13,678         8.58 %
Investment securities (2):
     Taxable income                              103,074         3,352         6.50            101,207        3,401         6.72
     Non-taxable income                           19,815           759         7.67             19,984          780         7.80
Other earning assets                               7,989           231         5.80              7,378          182         4.97
                                             ------------  ------------  -----------       ------------ ------------  -----------
          Total earning assets                   505,236        20,656         8.19            449,095       18,041         8.07
                                             ------------  ------------  -----------       ------------ ------------  -----------

Cash and due from banks                           14,854                                        14,738
Other assets, net                                 11,983                                        13,107
                                             ------------                                  ------------
          Total Assets                       $   532,073                                   $   476,940
                                             ============                                  ============

Interest-Bearing Liabilities Interest-
  bearing deposits:
     NOW accounts                            $    58,061           465         1.60        $    54,472          422         1.56
     Savings deposits                             36,652           459         2.51             38,015          441         2.34
     Money market accounts                        34,479           688         4.00             30,583          541         3.57
     Certificates and other time deposits        269,350         7,336         5.46            231,997        6,023         5.24
Retail repurchase agreements                      10,892           240         4.42             12,714          240         3.80
Federal Home Loan Bank advances                   15,357           405         5.29              6,033          149         4.99
Federal funds purchased                            1,668            52         6.31              1,181           29         4.92
                                             ------------  ------------  -----------       ------------ ------------  -----------
          Total interest-bearing liabilities     426,459         9,645         4.54            374,995        7,845         4.22
                                             ------------  ------------  -----------       ------------ ------------  -----------

Noninterest-bearing demand deposits               47,160                                        45,391
Other liabilities                                  5,320                                         5,322
Shareholders' equity                              53,134                                        51,232
                                             ------------                                  ------------
          Total Liabilities and
                 Shareholders' Equity        $   532,073                                   $   476,940
                                             ============                                  ============

Net Interest Income and Spread                             $    11,011         3.65 %                       10,196          3.85 %
                                                           ============  ===========                    ============  ===========

Net Yield on Earning Assets                                                    4.36 %                                       4.54 %
                                                                         ===========                                  ===========

<CAPTION>

SIX MONTHS ENDED JUNE 30                                   2000 Versus 1999
                                              -------------------------------------------
                                                   Interest Variance
                                                       due to (1)
                                              ----------------------------       Net
                                                Volume           Rate           Change
                                              ------------    ------------    ------------
                                            (Taxable Equivalent Basis, Dollars in Thousands)
Earning Assets
Loans (2) (3)                                 $     2,387     $       249     $     2,636
Investment securities (2):
     Taxable income                                    63            (112)            (49)
     Non-taxable income                                (7)            (14)            (21)
Other earning assets                                   16              33              49
                                              ------------    ------------    ------------
          Total earning assets                      2,459             156           2,615
                                              ------------    ------------    ------------

Cash and due from banks
Other assets, net

          Total Assets


Interest-Bearing Liabilities Interest-
  bearing deposits:
     NOW accounts                                      31              12              43
     Savings deposits                                 (15)             33              18
     Money market accounts                             76              71             147
     Certificates and other time deposits           1,041             272           1,313
Retail repurchase agreements                          (37)             37               -
Federal Home Loan Bank advances                       246              10             256
Federal funds purchased                                14               9              23
                                              ------------    ------------    ------------
          Total interest-bearing liabilities        1,356             444           1,800
                                              ------------    ------------    ------------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

          Total Liabilities and
                 Shareholders' Equity


Net Interest Income and Spread                $     1,103     $      (288)    $       815
                                              ============    ============    ============

Net Yield on Earning Assets


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

(2)     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.

(3)     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>

                                       18

<PAGE>


<TABLE>
<CAPTION>
Table 2
Average Balances and Net Interest Income Analysis


THREE MONTHS ENDED JUNE 30                                    2000                                        1999
                                             ----------------------------------------   -----------------------------------------
                                                                           Average                                     Average
                                                            Interest        Rates                       Interest        Rates
                                               Average       Income/       Earned/        Average       Income/        Earned/
                                               Balance       Expense        Paid          Balance       Expense         Paid
                                             ------------  ------------  ------------   ------------  -------------  ------------
                                                                 (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                                <C>             <C>          <C>           <C>              <C>          <C>
Earning Assets
Loans (2) (3)                                $  382,175    $      8,403         8.81 %  $  323,283    $      6,885          8.53 %
Investment securities (2):
     Taxable income                              103,371         1,680          6.50        103,201          1,677          6.50
     Non-taxable income                           19,667           375          7.63         19,782            384          7.76
Other earning assets                               8,219           125          6.09          7,599            104          5.49
                                             ------------  ------------  ------------   ------------  -------------  ------------
          Total earning assets                   513,432        10,583          8.26        453,865          9,050          7.99
                                             ------------  ------------  ------------   ------------  -------------  ------------

Cash and due from banks                           14,856                                     14,971
Other assets, net                                 12,093                                     13,195
                                             ------------                               ------------
          Total Assets                       $  540,381                                 $  482,031
                                             ============                               ============

Interest-Bearing Liabilities Interest-
  bearing deposits:
     NOW accounts                            $    58,587           236          1.61    $    55,489            215          1.55
     Savings deposits                             36,776           262          2.85         38,202            219          2.31
     Money market accounts                        34,618           359          4.17         31,843            283          3.57
     Certificates and other time deposits        275,163         3,800          5.54        233,273          2,999          5.16
Retail repurchase agreements                      10,842           127          4.70         13,357            129          3.86
Federal Home Loan Bank advances                   15,000           202          5.42          7,000             87          4.99
Federal funds purchased                            1,632            27          6.81            908             12          5.25
                                             ------------  ------------  ------------   ------------  -------------  ------------
          Total interest-bearing liabilities     432,618         5,013          4.65        380,072          3,944          4.16
                                             ------------  ------------  ------------   ------------  -------------  ------------

Noninterest-bearing demand deposits               48,541                                     45,699
Other liabilities                                  5,677                                      4,722
Shareholders' equity                              53,545                                     51,538
                                             ------------                               ------------
          Total Liabilities and
                 Shareholders' Equity        $   540,381                                $   482,031
                                             ============                               ============

Net Interest Income and Spread                             $     5,570          3.61 %                $      5,106          3.83 %
                                                           ============  ============                 =============  ============

Net Yield on Earning Assets                                                     4.34 %                                      4.50 %
                                                                         ============                                ============

<CAPTION>

THREE MONTHS ENDED JUNE 30                                     2000 Versus 1999
                                                 --------------------------------------------
                                                        Interest Variance
                                                            due to (1)
                                                 ----------------------------       Net
                                                   Volume           Rate           Change
                                                 ------------    ------------    ------------
                                               (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                              <C>            <C>            <C>
Earning Assets
Loans (2) (3)                                    $     1,286     $       232   $      1,518
Investment securities (2):
     Taxable income                                        3               -              3
     Non-taxable income                                   (2)             (7)            (9)
Other earning assets                                       9              12             21
                                                 ------------    ------------    ------------
          Total earning assets                         1,296             237          1,533
                                                 ------------    ------------    ------------

Cash and due from banks
Other assets, net

          Total Assets


Interest-Bearing Liabilities Interest-
  bearing deposits:
     NOW accounts                                         12               9              21
     Savings deposits                                     (8)             51              43
     Money market accounts                                26              50              76
     Certificates and other time deposits                 568            233             801
Retail repurchase agreements                             (27)             25              (2)
Federal Home Loan Bank advances                          107               8             115
Federal funds purchased                                   11               4              15
                                                 ------------    ------------    ------------
          Total interest-bearing liabilities             689             380           1,069
                                                 ------------    ------------    ------------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

          Total Liabilities and
                 Shareholders' Equity


Net Interest Income and Spread                   $       607     $      (143)    $       464
                                                 ============    ============    ============

Net Yield on Earning Assets

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

(2)     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.

(3)     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>

                                       19
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures about 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 above in
Item 2 "Management's Discussion and Analysis of Financial Condition and Results
of Operations" under the heading "Asset/Liability Management and Interest Rate
Sensitivity".

         Management does not believe there has been any significant change in
the overall analysis of financial instruments considered market risk sensitive,
as measured by the factors of contractual maturities, average interest rates and
estimated fair values, since the analysis prepared and presented in conjunction
with the Form 10-K Annual Report for the fiscal year ended December 31, 1999. A
merger acquisition in the second quarter of 2000, discussed in Note 3 to
Consolidated Financial Statements in Item 1 above, is not considered to have
materially impacted the Bank's market risk.

                                       20

<PAGE>

                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits.

                  Exhibits to this report are listed in the index to exhibits on
                  pages 22 and 23 of this report.

         (b)      Reports on Form 8-K.

                  During the quarter ended June 30, 2000, the Registrant filed a
                  Current Report on Form 8-K dated April 10, 2000, which
                  reported under "Item 2" that the Registrant had completed its
                  acquisition of Carolina Fincorp, Inc.

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

                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                                  FNB Corp.
                                                  (Registrant)


Date:    August 14, 2000                    By:   /s/ Jerry A. Little
                                                  -------------------
                                                      Jerry A. Little
                                                      Treasurer and Secretary
                                                      (Principal Financial and
                                                      Accounting Officer)

                                       21

<PAGE>

                                INDEX TO EXHIBITS

Exhibit No.                        Description of Exhibit
-----------                        ----------------------

   2.10      Amended and Restated Agreement and Plan of Merger by and between
             FNB Corp. and Carolina Fincorp, Inc., dated as of December 28,
             1999, incorporated herein by reference to Exhibit 2.10 to the
             Registrant's Form S-4 Registration Statement (No. 333-93869) filed
             December 30, 1999.

   2.11      Stock Option Agreement issued by Carolina Fincorp, Inc. to FNB
             Corp., dated as of October 16, 1999, incorporated herein by
             reference to Exhibit 2.11 to the Registrant's Form S-4 Registration
             Statement (No, 333-93869) filed December 30, 1999.

   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 June 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.

                                       22

<PAGE>

Exhibit No.                        Description of Exhibit
-----------                        ----------------------

   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 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 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     Copy of 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.

   27.10     Financial Data Schedule for the six months ended June 30, 2000.

   27.20     Restated Financial Data Schedule for the six months ended June 30,
             1999.

                                       23