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 SEPTEMBER 30, 1999

                         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 3,660,626 shares of $2.50 par value common stock outstanding
at November 11, 1999.

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                            FNB CORP. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                      September 30,
                                                              -------------------------------       December 31,
                                                                 1999               1998               1998
                                                              ------------       ------------      -------------
                                                                      (in thousands, except share data)
<S>                                                           <C>                 <C>               <C>

ASSETS
Cash and due from banks                                       $     9,969        $    10,746       $    12,787
Federal funds sold                                                  7,000              4,100                 -
Investment securities:
     Available for sale, at estimated fair value
          (amortized cost of $56,460, $42,493 and $44,918)         54,624             42,839             44,958
     Held to maturity (estimated fair value of
          $51,289, $52,722 and $60,859)                            52,206             51,332             59,813
Loans                                                             249,578            226,294            229,722
     Less:    Allowance for loan losses                            (2,587)            (2,507)            (2,517)
                                                              ------------       ------------      -------------
                     Net loans                                    246,991            223,787            227,205
                                                              ------------       ------------      -------------
Premises and equipment                                              7,812              6,394              6,978
Other assets                                                        6,391              5,194              4,882
                                                              ------------       ------------      -------------

                     TOTAL ASSETS                             $   384,993         $  344,392        $  356,623
                                                              ============       ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
     Noninterest-bearing demand deposits                      $    39,404        $    36,905       $    40,222
     Interest-bearing deposits:
          NOW, savings and money market deposits                   99,286             93,730             99,816
          Time deposits of $100,000 or more                        68,770             58,840             60,672
          Other time deposits                                     109,779            105,571            103,980
                                                              ------------       ------------      -------------
                     Total deposits                               317,239            295,046            304,690
Retail repurchase agreements                                       12,366             10,964             11,484
Federal Home Loan Bank advances                                    15,000                  -                  -
Federal funds purchased                                                 -                  -              1,545
Other liabilities                                                   4,380              3,842              3,902
                                                              ------------       ------------      -------------
                     Total Liabilities                            348,985            309,852            321,621
                                                              ------------       ------------      -------------

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 - 3,660,626, 3,652,151 and 3,655,376               9,152              9,130              9,138
     Surplus                                                          165                 26                117
     Retained earnings                                             27,903             25,156             25,721
     Accumulated other comprehensive income:
          Net unrealized securities gains (losses)                 (1,212)               228                 26
                                                              ------------       ------------      -------------
                     Total Shareholders' Equity                    36,008             34,540             35,002
                                                              ------------       ------------      -------------

                     TOTAL LIABILITIES AND
                            SHAREHOLDERS' EQUITY              $   384,993         $  344,392        $   356,623
                                                              ============       ============      =============

</TABLE>

See accompanying notes to consolidated financial statements.

                                        1

<PAGE>
                            FNB CORP. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                    Three Months Ended                    Nine Months Ended
                                                                      September 30,                         September 30,
                                                              -------------------------------      --------------------------------
                                                                 1999               1998               1999               1998
                                                              ------------       ------------      -------------      -------------
                                                                             (in thousands, except per share data)
<S>                                                           <C>                <C>               <C>                <C>

INTEREST INCOME:
     Interest and fees on loans                               $     5,248        $     5,108      $      15,305       $     15,309
     Interest and dividends on investment securities:
          Taxable income                                            1,357              1,202              4,037              3,526
          Non-taxable income                                          243                252                746                740
     Federal funds sold                                                 5                 54                 56                162
                                                              ------------       ------------      -------------      -------------
                    Total interest income                           6,853              6,616             20,144             19,737
                                                              ------------       ------------      -------------      -------------

INTEREST EXPENSE:
     Deposits                                                       2,675              2,808              7,916              8,332
     Retail repurchase agreements                                     130                115                370                323
     Federal Home Loan Bank advances                                   90                  -                239                  -
     Federal funds purchased                                           40                  2                 69                  9
                                                              ------------       ------------      -------------      -------------
                    Total interest expense                          2,935              2,925              8,594              8,664
                                                              ------------       ------------      -------------      -------------

NET INTEREST INCOME                                                 3,918              3,691             11,550             11,073
     Provision for loan losses                                         60                 60                220                330
                                                              ------------       ------------      -------------      -------------
Net Interest Income After Provision for Loan Losses                 3,858              3,631             11,330             10,743
                                                              ------------       ------------      -------------      -------------

NONINTEREST INCOME:
     Service charges on deposit accounts                              439                427              1,311              1,275
     Annuity and brokerage commissions                                 91                 62                344                169
     Cardholder and merchant services income                          120                 94                322                261
     Other service charges, commissions and fees                      110                 89                365                290
     Other income                                                      81                141                204                371
                                                              ------------       ------------      -------------      -------------
                    Total noninterest income                          841                813              2,546              2,366
                                                              ------------       ------------      -------------      -------------

NONINTEREST EXPENSE:
     Personnel expense                                              1,608              1,423              4,750              4,169
     Net occupancy expense                                            156                138                458                395
     Furniture and equipment expense                                  377                212                913                639
     Data processing services                                         163                311                689                954
     Other expense                                                    733                651              2,043              1,981
                                                              ------------       ------------      -------------      -------------
                    Total noninterest expense                       3,037              2,735              8,853              8,138
                                                              ------------       ------------      -------------      -------------

Income Before Income Taxes                                          1,662              1,709              5,023              4,971
Income taxes                                                          509                523              1,524              1,522
                                                              ------------       ------------      -------------      -------------

NET INCOME                                                    $      1,153       $      1,186      $      3,499       $      3,449
                                                              =============      =============     =============      =============

Net income per common share:
     Basic                                                    $       .32        $       .32       $        .96       $        .95
     Diluted                                                          .31                .31                .92                .91
                                                              ============       ============      =============      =============

Weighted average number of shares outstanding:
     Basic                                                      3,659,533          3,651,545          3,658,370          3,648,990
     Diluted                                                    3,773,285          3,789,343          3,787,910          3,793,360
                                                              ============       ============      =============      =============

Cash dividends declared per common share                      $       .12        $       .10       $        .36       $        .30
                                                              ============       ============      =============      =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                            FNB CORP. AND SUBSIDIARY

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

           Nine Months Ended September 30, 1999 and September 30, 1998


<TABLE>
<CAPTION>
                                                                                                  Accumulated
                                                      Common Stock                                  Other
                                                  ---------------------                 Retained Comprehensive
                                                    Shares      Amount     Surplus      Earnings     Income         Total
                                                  ----------  ----------  ----------   ----------   ---------    -----------
                                                                 (in thousands, except share data)

<S>                                                <C>         <C>         <C>          <C>          <C>          <C>
BALANCE, DECEMBER 31, 1997                         1,819,825   $   4,550   $     527    $  26,740    $      84    $  31,901
Comprehensive income:
     Net income                                         --          --          --          3,449         --          3,449
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income taxes of $73               --          --          --           --            144          144
                                                                                                                   --------
     Total comprehensive income                         --          --          --           --           --          3,953
                                                                                                                   --------
Cash dividends declared                                 --          --          --         (1,096)        --         (1,096)
Two-for-one stock split effected in the form            --
     of a 100% stock dividend                      1,825,343       4,563        (626)      (3,937)        --           --
Common stock issued through:                            --
     Dividend reinvestment plan                        1,015           2          23         --           --             25
     Stock option plan                                 5,968          15         102         --           --            117
                                                   ---------   ---------   ---------    ---------    ---------    ---------

BALANCE, SEPTEMBER 30, 1998                        3,652,151   $   9,130   $      26    $  25,156    $     228    $  34,540
                                                   =========   =========   =========    =========    =========    =========

BALANCE, DECEMBER 31, 1998                         3,655,376   $   9,138   $     117    $  25,721    $      26    $  35,002
Comprehensive income:
     Net income                                         --          --          --          3,499         --          3,499
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $638        --          --          --           --         (1,238)      (1,238)
                                                                                                                   --------
     Total comprehensive income                         --          --          --           --           --          2,261
                                                                                                                   --------
Cash dividends declared                                 --          --          --         (1,317)        --         (1,317)
Common stock issued through:
     Dividend reinvestment plan                         --          --          --           --           --           --
     Stock option plan                                 5,250          14          48         --           --             62
                                                   ---------   ---------   ---------    ---------    ---------    ---------

BALANCE, SEPTEMBER 30, 1999                        3,660,626   $   9,152   $     165    $  27,903    $  (1,212)   $  36,008
                                                   =========   =========   =========    =========    =========    =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                3
<PAGE>

                            FNB CORP. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                      Nine Months Ended
                                                                                         September 30,
                                                                                 -------------------------------
                                                                                    1999               1998
                                                                                 ------------      -------------
                                                                                         (in thousands)
<S>                                                                              <C>               <C>
OPERATING ACTIVITIES:
     Net income                                                                  $      3,499      $      3,449
     Adjustments to reconcile net income to net
          cash provided by operating activities:
          Depreciation and amortization of premises and equipment                        858                609
          Provision for loan losses                                                      220                330
          Deferred income taxes (benefit)                                                (53)                (6)
          Deferred loan fees and costs, net                                              105                125
          Premium amortization and discount accretion
                 of investment securities, net                                           (33)               (40)
          Amortization of intangibles                                                     14                 18
          Net decrease (increase) in loans held for sale                               3,958               (654)
          Increase in other assets                                                      (995)              (770)
          Increase in other liabilities                                                  589                586
                                                                                 ------------      -------------
                    Net Cash Provided by Operating Activities                          8,162              3,647
                                                                                 ------------      -------------

INVESTING ACTIVITIES:
     Available-for-sale securities:
          Proceeds from maturities and calls                                           7,958             26,205
          Purchases                                                                  (19,429)           (33,652)
     Held-to-maturity securities:
          Proceeds from maturities and calls                                           9,076             25,192
          Purchases                                                                   (1,500)           (24,775)
     Net increase in loans                                                           (24,152)            (8,388)
     Proceeds from sales of premises and equipment                                         2                  1
     Purchases of premises and equipment                                              (1,696)              (971)
     Other, net                                                                          239                 18
                                                                                 ------------      -------------
                    Net Cash Used in Investing Activities                            (29,502)           (16,370)
                                                                                 ------------      -------------

FINANCING ACTIVITIES:
     Net increase in deposits                                                         12,549             14,498
     Increase in retail repurchase agreements                                            882              3,527
     Increase in Federal Home Loan Bank advances                                      15,000                --
     Decrease in federal funds purchased                                              (1,545)            (2,400)
     Common stock issued                                                                  62                142
     Cash dividends paid                                                              (1,426)            (1,112)
                                                                                 ------------      -------------
                    Net Cash Provided by Financing Activities                         25,522             14,655
                                                                                 ------------      -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                              4,182              1,932
Cash and cash equivalents at beginning of period                                      12,787             12,914
                                                                                 ------------      -------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $    16,969       $    14,846
                                                                                 ============      =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
          Interest                                                               $     8,719      $       8,430
          Income taxes                                                                 1,505              1,577

</TABLE>

          See accompanying notes to consolidated financial statements.


                                        4
<PAGE>

                            FNB CORP. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.         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 Randolph, Montgomery and
           Chatham 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 Corporation adopted Statement
           of Financial Accounting Standards No. 131, "Disclosures about
           Segments of an Enterprise and Related Information", in 1998 without
           any impact on the consolidated financial statements as the chief
           operating decision maker reviews the results of operations of the
           Corporation and its subsidiary as a single enterprise.

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

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

2.         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.         On October 16, 1999, the Corporation entered into a definitive merger
           agreement to acquire Carolina Fincorp, Inc. ("Carolina"), holding
           company for Richmond Savings Bank, Inc., SSB ("Richmond Savings"),
           headquartered in Rockingham, North Carolina. Under the terms of the
           agreement, Carolina will be merged with a to-be-formed, wholly-owned
           subsidiary of FNB Corp. On or after the merger, Richmond Savings will
           be merged with and into the Bank. The merger will be accounted for as
           a pooling-of-interests transaction and is subject to several
           conditions, including approval by the shareholders of FNB Corp. and
           Carolina and approval by applicable regulatory authorities. To effect
           the merger, each share of Carolina common stock will be converted
           into .79 (subject to possible adjustment) of a share of FNB Corp.
           common stock. Completion of the transaction is expected late in the
           first quarter of 2000 or early in the second quarter of 2000. At
           September 30, 1999, Carolina operated five offices through Richmond
           Savings and had approximately $120,002,000 in total assets,
           $102,717,000 in deposits and $15,961,000 in stockholders' equity.

           Concurrently with the execution of the merger agreement, FNB Corp.
           received an option to purchase up to 19.9% of Carolina's common
           stock. The option is exercisable only under certain specified
           conditions.

                                        5
<PAGE>

4.         Basic net income per share, or basic earnings per share (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           Nine Months Ended
                                                    September 30,               September 30,
                                            ------------------------      -----------------------
                                              1999           1998           1999          1998
                                            ---------      ---------      ---------     ---------
<S>                                         <C>            <C>            <C>            <C>
Basic EPS denominator - Weighted
     average number of common
     shares outstanding                     3,659,533      3,651,545      3,658,370      3,648,990
Dilutive share effect arising from
     assumed exercise of stock options        113,752        137,798        129,540        144,370
                                            ---------      ---------      ---------      ---------
Diluted EPS denominator                     3,773,285      3,789,343      3,787,910      3,793,360
                                            =========      =========      =========      =========
</TABLE>

5.         Loans as presented are reduced by net deferred loan fees of $542,000,
           $388,000 and $443,000 at September 30, 1999, September 30, 1998 and
           December 31, 1998, respectively.

6.         Significant components of other expense were as follows:

<TABLE>
<CAPTION>
                                     Three Months Ended   Nine Months Ended
                                       September 30,        September 30,
                                    -------------------  ------------------
                                      1999       1998     1999       1998
                                    --------   --------  --------  --------
                                              (in thousands)
<S>                                    <C>       <C>       <C>       <C>
Stationery, printing and supplies      $123      $ 77      $340      $262
Advertising and marketing               100        70       226       280
</TABLE>


7.         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.

                                        6
<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

         The Corporation earned $3,499,000 in the first nine months of 1999, a
1.4% increase over the same period in 1998. Basic earnings per share increased
from $.95 to $.96 in comparing these nine-month periods and diluted earnings per
share increased from $.91 to $.92. For the 1999 third quarter, earnings amounted
to $1,153,000, which represented a 2.8% decrease from the 1998 third quarter
with basic and diluted earnings per share being unchanged at $.32 and $.31,
respectively. Total assets were $384,993,000 at September 30, 1999, up 11.8%
from September 30, 1998 and 8.0% from December 31, 1998. Loans amounted to
$249,578,000 at September 30, 1999, increasing 10.3% from September 30, 1998 and
8.6% from December 31, 1998. Total deposits grew 7.5% from September 30, 1998
and 4.1% from December 31, 1998 to $317,239,000 at September 30, 1999.

         On October 16, 1999, the Corporation entered into a definitive merger
agreement to acquire Carolina Fincorp, Inc. ("Carolina"), holding company for
Richmond Savings Bank, Inc., SSB ("Richmond Savings"), headquartered in
Rockingham, North Carolina. Under the terms of the agreement, Carolina will be
merged with a to-be-formed, wholly-owned subsidiary of FNB Corp. On or after the
merger, Richmond Savings will be merged with and into the Bank. The merger will
be accounted for as a pooling-of-interests transaction and is subject to several
conditions, including approval by the shareholders of FNB Corp. and Carolina and
approval by applicable regulatory authorities. To effect the merger, each share
of Carolina common stock will be converted into .79 (subject to possible
adjustment) of a share of FNB Corp. common stock. Completion of the transaction
is expected late in the first quarter of 2000 or early in the second quarter of
2000. At September 30, 1999, Carolina operated five offices through Richmond
Savings and had approximately $120,002,000 in total assets, $102,717,000 in
deposits and $15,961,000 in stockholders' equity.

         Concurrently with the execution of the merger agreement , FNB Corp.
received an option to purchase up to 19.9% of Carolina's common stock. The
option is exercisable only under certain specified conditions.

EARNINGS REVIEW

         The Corporation's net income increased $50,000 or 1.4% in the first
nine months of 1999 compared to the same period of 1998 and decreased $33,000 or
2.8% in comparing third quarter periods. Earnings were positively impacted in
the first nine months of 1999 by increases of $477,000 or 4.3% in net interest
income and $180,000 in noninterest income and by a reduction of $110,000 in the
provision for loan losses. These gains were significantly offset, however, by an
increase of $715,000 in noninterest expense, which was impacted in 1999 by a
major data processing conversion as discussed in "Noninterest Expense". The
positive impact on 1999 third quarter earnings from increases of $227,000 or
6.2% in net interest income and $28,000 in noninterest income was more than
offset by a $302,000 increase in noninterest expense.


                                        7
<PAGE>

         On an annualized basis, return on average assets decreased from 1.36%
in the first nine months of 1998 to 1.27% in the first nine months of 1999.
Return on average shareholders' equity decreased from 13.81% to 13.07% in
comparing the same periods. In comparing third quarter periods, return on
average assets decreased from 1.39% to 1.24% and return on average shareholders'
equity decreased from 13.91% to 12.89%.

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 $11,550,000 in the first nine months of 1999
compared to $11,073,000 in the same period of 1998. This increase of $477,000 or
4.3% resulted primarily from a 7.9% 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 4.91% in the first nine months
of 1998 to 4.76% in the same period of 1999. In comparing third quarter periods,
net interest income increased $227,000 or 6.2% reflecting a 9.2% increase in
average earning assets and a decline in the net interest margin from 4.85% to
4.72%. On a taxable equivalent basis, the increases in net interest income in
the first nine months and third quarter of 1999 were $537,000 and $239,000,
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.

         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 8.37%, 8.44% and 8.28% in 1998, 1997 and 1996, 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 has tended to negatively impact the Corporation's net interest
margin and net interest spread. Due to subsequent concern about inflationary
pressures that appear to be building in the U.S. economy, the Federal Reserve
elected to raise the


                                        8
<PAGE>

level of interest rates in the third quarter of 1999, resulting in two 25 basis
point increases in the prime rate that increased it from 7.75% to 8.25%.

         Following the reductions in late 1998, the prime rate averaged 7.87% in
the first nine months of 1999 compared to 8.50% in the same period of 1998.
Affected by the increases in the third quarter of 1999, the prime rate rose to a
higher average of 8.07% for that period but remained below the 8.50% average for
the 1998 third quarter. The net interest spread, in comparing nine-month
periods, declined by 8 basis points from 4.16% in 1998 to 4.08% in 1999,
reflecting the effect of a decrease in the average total yield on earning assets
that was only partially offset by a decrease in the average rate paid on
interest-bearing liabilities, or cost of funds. The yield on earning assets
decreased by 44 basis points from 8.53% in 1998 to 8.09% in 1999, while the cost
of funds decreased by 36 basis points from 4.37% to 4.01%. In comparing third
quarter periods, the net interest spread declined by 5 basis points from 4.10%
to 4.05%, as the yield on earning assets decreased by 43 basis points while the
cost of funds decreased by 38 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 positively impacted in the first nine months of
1999 compared to the same period in 1998 by a $110,000 decrease in the
provision.

         The allowance for loan losses, as a percentage of loans outstanding,
amounted to 1.04% at September 30, 1999 and 1.11% at September 30, 1998. The
reduction in the allowance percentage reflected changes in the loan portfolio
mix. As discussed in "Loans", the 1-4 family residential mortgage loan
portfolio, which requires a relatively lower level of reserve for loan losses,
has significantly increased since September 30, 1998. Further, a riskier loan
segment, retail installment loan contracts purchased from automobile and
equipment dealers, has been discontinued.


NONINTEREST INCOME

         Noninterest income for the first nine months and third quarter of 1999
increased $180,000 or 7.6% and $28,000 or 3.4%, respectively, compared to the
same periods in 1998, reflecting in part the general increase in the volume of
business. The gain in annuity and brokerage commissions in comparing nine-month
periods resulted primarily from increased sales of annuity products, reflecting
the high level of annuity sales activity in the first six months of 1999, while
the gain in comparing third quarter periods was due largely to increased sales
of brokerage services. The level of other service charges, commissions and fees
was higher in comparing nine-month periods due largely to a significantly
greater annual commission adjustment in 1999 on sales of credit life insurance,
such adjustment being paid in the first quarter of each year and based on prior
year claims. Other income was lower due mainly to a reduction in gains on loan
sales, but the comparison to 1998 was also impacted by the $39,000 recovery in
the 1998 second quarter of a portion of certain expenses, initially recorded in
the 1997 fourth quarter, related to a terminated merger agreement with another
financial institution.


                                       9
<PAGE>

NONINTEREST EXPENSE

         Noninterest expense was $715,000 or 8.8% higher in the first nine
months of 1999 compared to the same period in 1998 and for the third quarter was
$302,000 or 11.0% higher, due largely to increased personnel expense, the effect
of a major data processing conversion 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"). Personnel
expense was impacted by increased staffing requirements, especially as related
to the data processing conversion, and by normal salary adjustments. Net
occupancy expense was affected by increased maintenance charges. Furniture and
equipment expense increased largely as a result of the data processing
conversion, especially for depreciation charges. Advertising and marketing
expense, included in other expense, increased in 1998 above the level of prior
years due primarily to new programs undertaken that included an advertising
campaign based on customer testimonials and a major marketing plan centered
around the "YES YOU CAN, YES WE CAN(R)" program. While significant expenditures
have continued in 1999 for the new marketing plan, advertising and marketing
expense decreased $54,000 in the first nine months of 1999 compared to the same
period in 1998, although such expense increased $30,000 in comparing third
quarter periods.

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

         Subsequent to the 1999 first quarter, the total cost related to data
processing operations on an in-house basis compares favorably to the cost that
was being experienced under the service bureau arrangement prior to the start of
the conversion 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 of 30.3% in the first nine months of 1999
did not significantly change from the 30.6% rate in the same period of 1998.

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 $46,195,000
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.

                                       10
<PAGE>

         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 September 30, 1999.
A liability-sensitive position means that in gap measurement periods of one year
or less there are more liabilities than assets subject to immediate repricing as
market rates change. Because immediately rate sensitive interest-bearing
liabilities exceed rate sensitive assets, the earnings position could improve in
a declining rate environment and could deteriorate in a rising rate environment,
depending on the correlation of rate changes in these two categories. Included
in interest-bearing liabilities subject to rate changes within 90 days is a
portion of the 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.

         As a specific asset/liability management tool, the Bank, at September
30, 1999, had entered into an interest rate floor agreement with a correspondent
bank to protect certain variable-rate loans from the downward effects of their
repricing in the event of a decreasing rate environment. The notional amount of
the agreement is $10,000,000. The agreement requires the correspondent bank to
pay to the Bank the difference between the floor rate of interest of 7.50% and
the prime rate of interest in the event that the prime rate is less. Any
payments received under the agreement, net of premium amortization, will be
treated as an adjustment of interest income on loans. At September 30, 1999, the
unamortized premium related to the interest rate floor agreement, which expires
in December 1999, amounted to $4,000 and had no estimated fair value.

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 I and Tier II, as a percentage of
risk-adjusted 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 I capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other disallowed
intangible assets. Tier II capital, which is limited to the total of Tier I
capital, includes allowable amounts of subordinated debt, mandatory convertible
securities, preferred stock and the allowance for loan losses. Under current
requirements, the minimum total capital ratio, consisting of both Tier I and
Tier II capital, is 8.00% and the minimum Tier I capital ratio is 4.00%. At

                                       11
<PAGE>

September 30, 1999, FNB Corp. and the Bank had total capital ratios of 15.57%
and 15.17%, respectively, and Tier I capital ratios of 14.56% and 14.16%.

         The leverage capital ratio, which serves as a minimum capital standard,
considers Tier I 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 September 30, 1999,
FNB Corp. and the Bank had leverage capital ratios of 9.92% and 9.65%,
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 I capital of 6.00% and for leverage
capital of 5.00%. As noted above, the Bank met all of those ratio requirements
at September 30, 1999 and, accordingly, is well-capitalized under the regulatory
framework for prompt corrective action.

BALANCE SHEET REVIEW

         Total assets at September 30, 1999 were higher than at September 30,
1998 and December 31, 1998 by $40,601,000 or 11.8% and $28,370,000 or 8.0%,
respectively; deposits were ahead by $22,193,000 or 7.5% and $12,549,000 or
4.1%. A portion of the asset growth was funded by retail repurchase agreements,
which had increased at September 30, 1999 by $1,402,000 or 12.8% from September
30, 1998 and by $882,000 or 7.7% from December 31, 1998. Asset growth was also
funded in the first nine months of 1999 by initial advances totaling $15,000,000
from the Federal Home Loan Bank. Average assets increased 8.1% in the first nine
months of 1999 compared to the same period in 1998, while average deposits
increased 4.6%, the third quarter increases being 9.2% and 5.5%, respectively.

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 September 30, 1999,
when the growth in total assets exceeded that for loans, the level of investment
securities was increased $12,659,000 or 13.4%, with a net increase of $2,059,000
or 2.0% occurring in the first nine months of 1999. 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.

LOANS

         The Corporation's primary source of revenue and largest component of
earning assets is the loan portfolio. Loans increased $23,284,000 or 10.3%
during the twelve-month period ended September 30, 1999. The net loan increase
during the first nine months of 1999 was $19,856,000 or 8.6%. Average loans were
$12,855,000 or 5.7% higher in the first nine months of 1999 than in the same
period of 1998. The ratio of average loans to average deposits, in comparing
nine-month periods, increased from 76.8% in 1998 to 77.6% in 1999. The ratio of
loans to deposits at September 30, 1999 was 78.7%.

         The commercial and agricultural loan portfolio has experienced strong
gains during both the twelve-month period ended September 30, 1999 and the first
nine months of 1999. The 1-4 family residential

                                       12
<PAGE>

mortgage loan portfolio has also gained significantly during these periods.
Lease financing contracts, a new loan product in 1999, has further added to the
balance of the 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 $3,531,000 during the twelve-month period ended
September 30, 1999. Consequently, total consumer loans declined significantly
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.

         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.

<TABLE>
<CAPTION>
                                     Nine Months Ended
                                       September 30,
                                    ------------------
                                     1999        1998
                                    ------      ------
                                       (in thousands)
<S>                                 <C>         <C>
Balance at beginning of period      $2,517      $2,294
Charge-offs                            272         255
Recoveries                             122         138
                                    ------      ------
         Net loan charge-offs          150         117
Provision for loan losses              220         330
                                    ------      ------

Balance at end of period            $2,587      $2,507
                                    ======      ======
</TABLE>

                                       13
<PAGE>

         At September 30, 1999, the Bank had impaired loans with three borrowers
that totaled $1,568,000, of which $578,000 was on nonaccrual status. The related
allowance for loan losses on these loans amounted to $301,000. The payment of
principal and interest on impaired loans with one borrower is guaranteed up to a
specified percentage by an agency of the U. S. Government. Based on the balances
outstanding at September 30, 1999, the guaranteed portion of impaired loans
amounted to $792,000.

         Nonperforming loans were $1,109,000 in total at September 30, 1999,
nonaccrual loans and accruing loans past due 90 days or more amounting to
$716,000 and $393,000, 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. The growth in money market accounts of $5,426,000 during
the twelve-month period ended September 30, 1999 and $2,869,000 during the first
nine months of 1999 was due to a high-yield product that has had steady growth
since its first introduction in the 1996 fourth quarter. Noninterest-bearing
demand deposits at September 30, 1999 increased $2,499,000 compared to September
30, 1998, but decreased $818,000 compared to December 31, 1998. Average demand
deposits increased $3,171,000 in the first nine months of 1999 compared to the
same period in 1998. Further, the level of time deposits obtained from
governmental units fluctuates, amounting to $32,512,000, $23,863,000 and
$25,905,000 at September 30, 1999, September 30, 1998 and December 31, 1998,
respectively.

BUSINESS DEVELOPMENT MATTERS

         As discussed in the "Overview" and in Note 3 to Consolidated Financial
Statements, the Corporation has entered into a definitive merger agreement to
acquire a savings bank holding company which will be merged with a to-be-formed,
wholly-owned subsidiary of the Corporation late in the first or
early in the second quarter of 2000.

         Prior to March 26, 1999, the Bank's data processing, item capture and
statement rendering operations were outsourced under a service bureau
arrangement. Commencing in the 1998 fourth quarter, the Bank began the process
of converting these operations to an in-house basis. Conversion to the
replacement systems occurred on March 26, 1999. 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 2000, resulting in
a total capital outlay of approximately $1,000,000, of which approximately
one-third was recorded in 1998. Prior to completion of the permanent facility, a
temporary mobile office will be operated at this site. The temporary office
opened in August 1999.

                                       14
<PAGE>

         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 amounted to $1,355,000,
$4,886,000 and $3,745,000 at September 30, 1999, September 30, 1998 and December
31, 1998, 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 READINESS DISCLOSURES

         The Corporation recognizes and is addressing the potentially serious
implications of the "Year 2000 Issue", which is a general term used to describe
various problems that may result from the improper processing of dates and
date-sensitive calculations by many existing computer programs when the Year
2000 is reached. This issue is ultimately caused by the fact that many of the
world's existing computer programs use only two digits to identify the year in
the date field of a program. These programs were designed and developed without
considering the upcoming change in the century and could experience serious
malfunctions when the last two digits of the year change to "00" as a result of
identifying the "00" year as the year 1900 rather than the year 2000. This
identification error could result in a disruption of normal business operations,
including, among other things, the miscalculation of interest accruals and the
inability to process customer transactions. In addition, non-banking systems,
such as security alarms, elevators and telephones, are subject to malfunction
due to their dependence upon computers for proper operation.

         The Corporation first began to assess its Year 2000 readiness in August
1996, completing that assessment in January 1997. The Corporation then developed
a Year 2000 Plan that follows guidelines outlined by the Federal Financial
Institutions Examination Council. The Year 2000 Project Team, which is
responsible for execution of the Plan, includes members of senior management and
departmental management from all areas of the organization. Additionally, an
outside consulting firm has been engaged to assist with the Year 2000 project.

         In the implementation of the Year 2000 Plan, a thorough inventory was
first performed to determine all hardware, software and facilities that might be
impacted by the Year 2000 Issue. Since all software is purchased and no separate
in-house programming is performed, the Corporation is dependent upon its
third-party vendors for modifications of its existing systems to correct any
defects related to the Year 2000 Issue. Accordingly, written documentation has
been solicited from all of the software and hardware vendors, as well as the
providers of facilities using embedded chip technology, with respect to their
Year 2000 compliance status. The validation phase of the Corporation's project
includes the receipt and analysis of vendor-performed testing, as well as the
testing of hardware, software and facilities in the Corporate environment.
Internal testing of mission critical systems was completed by June 30, 1999.
Testing on systems not considered mission critical will be completed by December
31, 1999.

         Prior to March 26, 1999, the Corporation used a service bureau for core
processing and related items processing. Testing of this mission critical system
for Year 2000 compliance was completed by December 31, 1998. In August 1998,
however, the Corporation contracted with third-party vendors for the hardware
and software necessary to convert this entire operation to an in-house basis.
Conversion to the replacement systems occurred on March 26, 1999. Initial
internal testing on a trial basis of these replacement systems for Year 2000
compliance was completed in November 1998. Final testing was completed by June
30, 1999.

                                       15
<PAGE>

         The Corporation is informing its customers about the Year 2000 Issue in
general and the efforts it is undertaking to ensure that banking services
continue in the Year 2000 and beyond. Additionally, the Corporation is
contacting its significant commercial customers to determine such customers'
plans with respect to the Year 2000 Issue and the Corporation's vulnerability to
the failure of any such customer to remediate its own problems that may result
from the Year 2000 Issue. As most commercial customers depend on computer
systems that must be Year 2000 compliant, a disruption in their businesses could
result in potentially significant financial difficulties that could affect their
creditworthiness. The Corporation is also initiating contact with key vendors to
determine their plans with respect to the Year 2000 Issue. There can be no
guarantee that customers and vendors will convert their systems on a timely
basis or in a manner that is compatible with the Corporation's systems.
Significant business interruptions or failures by significant commercial
vendors, trading partners or governmental agencies resulting from the effects of
the Year 2000 Issue could have a material adverse effect on the Corporation.

         The Corporation's projected cost of Year 2000 compliance has been
estimated to be approximately $200,000, although the ultimate amount will likely
be less based on the assessment at September 30, 1999. The majority of such
estimated cost relates to computer equipment that may need to be replaced.
Actual Year 2000 project expenditures totaled $112,000 at September 30, 1999. Of
this total, capital expenditures amounted to $69,000 on a cumulative basis and
were all recorded prior to 1999. Project expenses amounted to $43,000 on a
cumulative basis and $28,000 for the nine months ended September 30, 1999.
Funding of Year 2000 project costs will come from normal operating cash flows;
however, the expenses associated with the Year 2000 Issue will directly reduce
otherwise reported net income for the Corporation.

         Management believes that the potential effects on the Corporation's
internal operations of the Year 2000 Issue can be mitigated on a timely basis.
However, if required modifications or conversions are not made or are not
completed on a timely basis, the Year 2000 Issue could disrupt normal business
operations and have a material adverse impact on the Corporation.

         Contingency plans to mitigate the potential effects of a disruption in
normal business operations have been developed and tested. Contingency planning
includes the development of alternative solutions should a vendor not become
compliant, as well as plans for the resumption of business if, despite the
Corporation's best efforts, there is a disruption in business operations. In the
event of what could be described as a "worst case" scenario, the contingency
plans allow for limited transactions, including the ability to make certain
deposits and withdrawals, until the Year 2000 problems are fixed.

         The costs of the Year 2000 project and the schedule for achieving Year
2000 compliance are based on management's best estimates, which were derived
using numerous assumptions of future events such as the availability of certain
resources (including appropriately trained personnel and other internal and
external resources), third-party vendor plans and other factors. However, there
can be no guarantee that these estimates will be achieved at the cost disclosed
or within the timeframes indicated, and actual results could differ materially
from these plans. Factors that might affect the timely and efficient completion
of the Corporation's Year 2000 project include, but are not limited to, vendors'
abilities to adequately correct or convert software and the effect on the
Corporation's ability to test its systems, the availability and cost of
personnel trained in the Year 2000 areas, the ability to identify and correct
all relevant computer programs, the readiness of key utilities, vendors and
customers, and similar uncertainties.


                                       16

<PAGE>
CAUTIONARY STATEMENT 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 proposed merger with
Carolina may not materialize, (ii) the Corporation may experience greater than
expected deposit attrition, customer loss, or revenue loss following completion
of the proposed 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, (viii) changes may occur in the securities
markets, and (ix) disruptions of the operations of the Corporation or any other
governmental or private entity may occur as a result of the "Year 2000 Issue".
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 1
AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS

<TABLE>
<CAPTION>

NINE MONTHS ENDED SEPTEMBER 30                                   1999                                     1998
                                                ---------------------------------------    --------------------------------------
                                                                             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)                                   $  237,089    $    15,337         8.64 %   $  224,234   $    15,327          9.13 %
Investment securities (2):
     Taxable income                                  86,490         4,335         6.68          71,860         3,780         7.01
     Non-taxable income                              19,866         1,160         7.78          19,637         1,152         7.82
Federal funds sold                                    1,490            56         4.95           3,889           162         5.57
                                                ------------  ------------ ------------    ------------ ------------- ------------
          Total earning assets                      344,935        20,888         8.09         319,620        20,421         8.53
                                                ------------  ------------ ------------    ------------ ------------- ------------

Cash and due from banks                              11,705                                     10,630
Other assets, net                                     9,400                                      8,331
                                                ------------                               ------------
          TOTAL ASSETS                          $  366,040                                 $  338,581
                                                ============                               ============

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
     NOW accounts                               $    43,072           400         1.24     $    41,048           505         1.64
     Savings deposits                                26,474           404         2.04          27,725           472         2.28
     Money market accounts                           31,203           839         3.60          24,668           721         3.91
     Certificates and other time deposits           164,679         6,273         5.09         161,631         6,634         5.49
Retail repurchase agreements                         12,935           370         3.83           9,517           323         4.55
Federal Home Loan Bank advances                       6,399           239         4.99             --            --           --
Federal funds purchased                               1,752            69         5.24             202             9         5.84
                                                ------------  ------------ ------------    ------------ ------------- ------------
          Total interest-bearing liabilities        286,514         8,594         4.01         264,791         8,664         4.37
                                                ------------  ------------ ------------    ------------ ------------- ------------

Noninterest-bearing demand deposits                  40,139                                     36,968
Other liabilities                                     3,702                                      3,512
Shareholders' equity                                 35,685                                     33,310
                                                ------------                               ------------
          TOTAL LIABILITIES AND
                 SHAREHOLDERS' EQUITY           $  366,040                                 $  338,581
                                                ============                               ============

NET INTEREST INCOME AND SPREAD                                $    12,294         4.08 %                $    11,757          4.16 %
                                                              ============ ============                 ============= ============

NET YIELD ON EARNING ASSETS                                                       4.76 %                                     4.91 %
                                                                           ============                               ============
</TABLE>


<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30

                                                                                1999 Versus 1998
                                                                --------------------------------------------
                                                                     Interest Variance
                                                                         due to (1)
                                                                ----------------------------       Net
                                                                  Volume           Rate           Change
                                                                ------------    ------------    ------------
                                                               (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                                             <C>             <C>             <C>
EARNING ASSETS
Loans (2) (3)                                                   $       854     $      (844)    $        10
Investment securities (2):
     Taxable income                                                     740            (185)            555
     Non-taxable income                                                  14              (6)              8
Federal funds sold                                                      (90)            (16)           (106)
                                                                ------------    ------------    ------------
          Total earning assets                                        1,518          (1,051)            467
                                                                ------------    ------------    ------------

Cash and due from banks
Other assets, net

          TOTAL ASSETS


INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
     NOW accounts                                                        23            (128)           (105)
     Savings deposits                                                   (20)            (48)            (68)
     Money market accounts                                              179             (61)            118
     Certificates and other time deposits                               125            (486)           (361)
Retail repurchase agreements                                            104             (57)             47
Federal Home Loan Bank advances                                         239              --             239
Federal funds purchased                                                  61              (1)             60
                                                                ------------    ------------    ------------
          Total interest-bearing liabilities                            711            (781)            (70)
                                                                ------------    ------------    ------------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

          TOTAL LIABILITIES AND
                 SHAREHOLDERS' EQUITY


NET INTEREST INCOME AND SPREAD                                  $        807    $       (270)   $        537
                                                                ============    ============    ============

NET YIELD ON EARNING ASSETS
</TABLE>

(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.

                                       18
<PAGE>

TABLE 2
AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS

<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30                                  1999                                        1998
                                                  --------------------------------------   ---------------------------------------
                                                                              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)                                     $  243,424   $      5,259        8.59%    $  224,134   $      5,114         9.07%
Investment securities (2):
     Taxable income                                    89,109        1,457         6.54          74,626         1,290         6.92
     Non-taxable income                                19,634          379         7.71          20,096           393         7.81
Federal funds sold                                        335            5         5.29           3,875            54         5.57
                                                  ------------ ------------ ------------    ------------ ------------- ------------
          Total earning assets                        352,502        7,100         8.02         322,731         6,851         8.45
                                                  ------------ ------------ ------------    ------------ ------------- ------------

Cash and due from banks                                11,640                                    10,561
Other assets, net                                       9,002                                     8,449
                                                  ------------                              ------------
          TOTAL ASSETS                            $  373,144                                $  341,741
                                                  ============                              ============

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
     NOW accounts                                 $    42,850          126         1.16     $    41,005           157         1.51
     Savings deposits                                  26,417          134         2.01          27,023           151         2.22
     Money market accounts                             32,423          298         3.65          25,959           257         3.94
     Certificates and other time deposits             167,968        2,117         5.00         162,675         2,243         5.47
Retail repurchase agreements                           13,370          130         3.88          10,168           115         4.51
Federal Home Loan Bank advances                         7,119           90         4.99             --            --            --
Federal funds purchased                                 2,875           40         5.51             125             2         5.95
                                                  ------------ ------------ ------------    ------------ ------------- ------------
          Total interest-bearing liabilities          293,022        2,935         3.97         266,955         2,925         4.35
                                                  ------------ ------------ ------------    ------------ ------------- ------------

Noninterest-bearing demand deposits                    40,222                                    36,966
Other liabilities                                       4,109                                     3,703
Shareholders' equity                                   35,791                                    34,117
                                                  ------------                              ------------
          TOTAL LIABILITIES AND
                 SHAREHOLDERS' EQUITY             $  373,144                                $  341,741
                                                  ============                              ============

NET INTEREST INCOME AND SPREAD                                 $      4,165        4.05%                 $      3,926         4.10%
                                                               ============ ============                 ============= ============

NET YIELD ON EARNING ASSETS                                                        4.72%                                      4.85%
                                                                            ============                               ============
</TABLE>


<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30

                                                                                1999 Versus 1998
                                                                  --------------------------------------------
                                                                       Interest Variance
                                                                            due to (1)
                                                                  ----------------------------       Net
                                                                    Volume           Rate           Change
                                                                  ------------    ------------    ------------
                                                                 (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                                               <C>           <C>             <C>
EARNING ASSETS
Loans (2) (3)                                                     $       425   $        (280)  $         145
Investment securities (2):
     Taxable income                                                       241             (74)            167
     Non-taxable income                                                    (9)             (5)            (14)
Federal funds sold                                                        (46)             (3)            (49)
                                                                  ------------    ------------    ------------
          Total earning assets                                            611            (362)            249
                                                                  ------------    ------------    ------------

Cash and due from banks
Other assets, net

          TOTAL ASSETS


INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
     NOW accounts                                                           7             (38)            (31)
     Savings deposits                                                      (3)            (14)            (17)
     Money market accounts                                                 61             (20)             41
     Certificates and other time deposits                                  71            (197)           (126)
Retail repurchase agreements                                               33             (18)             15
Federal Home Loan Bank advances                                            90              --              90
Federal funds purchased                                                    38              --              38
                                                                  ------------    ------------    ------------
          Total interest-bearing liabilities                              297            (287)             10
                                                                  ------------    ------------    ------------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

          TOTAL LIABILITIES AND
                 SHAREHOLDERS' EQUITY


NET INTEREST INCOME AND SPREAD                                    $       314     $       (75)    $       239
                                                                  ============    ============    ============

NET YIELD ON EARNING ASSETS
</TABLE>


(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.

                                       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, 1998.


                                       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.

                  No reports on Form 8-K were filed during the quarter ended
September 30, 1999.


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


                                   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:    November 12, 1999                    By:  /s/ Jerry A. Little
                                                   -------------------------
                                                      Jerry A. Little
                                                      Treasurer and Secretary
                                                      (Principal Financial and
                                                      Accounting Officer)

                                       21
<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.                  DESCRIPTION OF EXHIBIT
-----------                  ----------------------
<S>       <C>
   2.10   Agreement and Plan of Merger dated October 16, 1999 between the Registrant and
          Carolina Fincorp, Inc.

   2.11   Option Agreement dated October 16, 1999 between the Registrant and
          Carolina Fincorp, Inc.

*  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.

* 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.

* 10.30   Copy of 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.


                                       22
<PAGE>
<CAPTION>
EXHIBIT NO.                  DESCRIPTION OF EXHIBIT
-----------                  ----------------------
<S>       <C>
* 10.31   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.

* 10.32   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.

* 10.40   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     Financial Data Schedule for the nine months ended September 30, 1999.
</TABLE>


*  Incorporated by reference to the statement or report indicated.


                                       23