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


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


                                    FORM 10-Q


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

                 For the quarterly period ended June 30, 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 3,658,826 shares of $2.50 par value common stock outstanding
at August 11, 1999.

<PAGE>
                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                            FNB Corp. and Subsidiary

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         June 30,
                                                              -------------------------------       December 31,
                                                                 1999               1998               1998
                                                              ------------       ------------      -------------
                                                                      (in thousands, except share data)
<S>                                                           <C>                <C>               <C>
ASSETS
Cash and due from banks                                       $    14,797        $    14,117       $    12,787
Federal funds sold                                                      -              3,960                 -
Investment securities:
     Available for sale, at estimated fair value
          (amortized cost of $56,861, $44,120 and $44,918)         54,917             44,154             44,958
     Held to maturity (estimated fair value of
          $51,334, $53,055 and $60,859)                            52,221             52,381             59,813
Loans                                                             239,166            223,912            229,722
     Less:    Allowance for loan losses                            (2,562)            (2,468)            (2,517)
                                                              ------------       ------------      -------------
                     Net loans                                    236,604            221,444            227,205
                                                              ------------       ------------      -------------
Premises and equipment                                              7,597              5,876              6,978
Other assets                                                        5,745              4,899              4,882
                                                              ------------       ------------      -------------

                     Total Assets                             $   371,881        $  346,831        $  356,623
                                                              ============       ============      =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
     Noninterest-bearing demand deposits                      $    41,591        $    44,913       $    40,222
     Interest-bearing deposits:
          NOW, savings and money market deposits                  100,005             93,105             99,816
          Time deposits of $100,000 or more                        58,974             57,624             60,672
          Other time deposits                                     104,173            104,634            103,980
                                                              ------------       ------------      -------------
                     Total deposits                               304,743            300,276            304,690
Retail repurchase agreements                                       13,482              9,169             11,484
Federal Home Loan Bank advances                                     7,000                  -                 -
Federal funds purchased                                             7,825                  -             1,545
Other liabilities                                                   3,632              3,898              3,902
                                                              ------------       ------------      -------------
                     Total Liabilities                            336,682            313,343            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 - 3,658,826, 3,651,137 and 3,655,376               9,147              9,128              9,138
     Surplus                                                          146                  3                117
     Retained earnings                                             27,189             24,335             25,721
     Accumulated other comprehensive income:
          Net unrealized securities gains (losses)                 (1,283)                22                 26
                                                              ------------       ------------      -------------
                     Total Shareholders' Equity                    35,199             33,488             35,002
                                                              ------------       ------------      -------------

                     Total Liabilities and
                            Shareholders' Equity              $   371,881         $  346,831        $  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                    Six Months Ended
                                                                         June 30,                             June 30,
                                                              -------------------------------      --------------------------------
                                                                 1999               1998               1999               1998
                                                              ------------       ------------      -------------      -------------
                                                                             (in thousands, except per share data)
<S>                                                           <C>                <C>               <C>                <C>
Interest Income:
     Interest and fees on loans                               $     5,055       $      5,126       $     10,057        $    10,201
     Interest and dividends on investment securities:
          Taxable income                                            1,338              1,214              2,680              2,324
          Non-taxable income                                          248                251                503                488
     Federal funds sold                                                24                 47                 51                108
                                                              ------------       ------------      -------------      -------------
                    Total interest income                           6,665              6,638             13,291             13,121
                                                              ------------       ------------      -------------      -------------

Interest Expense:
     Deposits                                                       2,605              2,812              5,241              5,524
     Retail repurchase agreements                                     129                112                240                208
     Federal Home Loan Bank advances                                   87                  -                149                  -
     Federal funds purchased                                           12                  6                 29                  7
                                                              ------------       ------------      -------------      -------------
                    Total interest expense                          2,833              2,930              5,659              5,739
                                                              ------------       ------------      -------------      -------------

Net Interest Income                                                 3,832              3,708              7,632              7,382
     Provision for loan losses                                         95                110                160                270
                                                              ------------       ------------      -------------      -------------
Net Interest Income After Provision for Loan Losses                 3,737              3,598              7,472              7,112
                                                              ------------       ------------      -------------      -------------

Noninterest Income:
     Service charges on deposit accounts                              449                442                872                848
     Annuity and brokerage commissions                                132                 63                253                107
     Cardholder and merchant services income                          114                 90                202                167
     Other service charges, commissions and fees                      111                 95                255                201
     Other income                                                      61                147                123                230
                                                              ------------       ------------      -------------      -------------
                    Total noninterest income                          867                837              1,705              1,553
                                                              ------------       ------------      -------------      -------------

Noninterest Expense:
     Personnel expense                                              1,602              1,398              3,142              2,746
     Net occupancy expense                                            151                128                302                257
     Furniture and equipment expense                                  310                209                536                427
     Data processing services                                         143                338                526                643
     Other expense                                                    669                667              1,310              1,330
                                                              ------------       ------------      -------------      -------------
                    Total noninterest expense                       2,875              2,740              5,816              5,403
                                                              ------------       ------------      -------------      -------------

Income Before Income Taxes                                          1,729              1,695              3,361              3,262
Income taxes                                                          528                518              1,015                999
                                                              ------------       ------------      -------------      -------------

Net Income                                                    $      1,201             1,177       $      2,346              2,263
                                                              ============       ============      =============      =============

Net income per common share:
     Basic                                                    $       .33        $       .32       $        .64       $        .62
     Diluted                                                          .32                .31                .62                .60
                                                              ============       ============      =============      =============

Weighted average number of shares outstanding:
     Basic                                                      3,658,351          3,651,008          3,657,779          3,647,692
     Diluted                                                    3,787,625          3,798,822          3,795,344          3,795,403
                                                              ============       ============      =============      =============

Cash dividends declared per common share                      $       .12        $       .10      $         .24       $        .20
                                                              ============       ============      =============      =============
</TABLE>
See accompanying notes to consolidated financial statements.

                                        2


<PAGE>

                            FNB Corp. and Subsidiary

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

                Six Months Ended June 30, 1999 and June 30, 1998



<TABLE>
<CAPTION>

                                                                      Common Stock
                                                              ------------------------------                     Retained
                                                                 Shares          Amount           Surplus        Earnings
                                                              -------------   --------------   --------------  --------------
                                                                                              (in thousands, except share data)
<S>                                                              <C>          <C>              <C>             <C>
Balance, December 31, 1997                                       1,819,825    $      4,550     $         527     $    26,740
Comprehensive income:
     Net income                                                          -               -                 -           2,263
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $33                          -               -                 -               -

     Total comprehensive income                                          -               -                 -               -

Cash dividends declared                                                  -               -                 -            (731)
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               -                 -               -
     Stock option plan                                               5,968              15               102               -
                                                              -------------   --------------   --------------  --------------

Balance, June 30, 1998                                           3,651,137    $      9,128     $           3     $    24,335
                                                              =============   ==============   ==============  ==============



Balance, December 31, 1998                                       3,655,376    $      9,138     $         117     $    25,721
Comprehensive income:
     Net income                                                          -               -                 -           2,346
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $675                         -               -                 -               -

     Total comprehensive income                                          -               -                 -               -

Cash dividends declared                                                  -               -                 -            (878)
Common stock issued through:
     Dividend reinvestment plan                                          -               -                 -               -
     Stock option plan                                               3,450               9                29               -
                                                              -------------   --------------   --------------  --------------

Balance, June 30, 1999                                           3,658,826    $      9,147     $         146     $    27,189
                                                              =============   ==============   ==============  ==============

<CAPTION>
                                                                    Accumulated
                                                                       Other
                                                                   Comprehensive
                                                                      Income                  Total
                                                                 ------------------       --------------

<S>                                                              <C>                      <C>
Balance, December 31, 1997                                       $               84         $    31,901
Comprehensive income:
     Net income                                                                   -               2,263
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $33                                 (62)                (62)
                                                                                          --------------
     Total comprehensive income                                                   -               2,201
                                                                                          --------------
Cash dividends declared                                                           -                (731)
Two-for-one stock split effected in the form                                      -
     of a 100% stock dividend                                                     -                   -
Common stock issued through:                                                      -
     Dividend reinvestment plan                                                   -                   -
     Stock option plan                                                            -                 117
                                                                 ------------------       --------------

Balance, June 30, 1998                                           $               22         $    33,488
                                                                 ==================       ==============



Balance, December 31, 1998                                       $               26         $    35,002
Comprehensive income:                                                             -
     Net income                                                                                   2,346
     Other comprehensive income:
          Unrealized securities gains (losses),
               net of income tax benefit of $675                             (1,309)             (1,309)
                                                                                          --------------
     Total comprehensive income                                                   -               1,037
                                                                                          --------------
Cash dividends declared                                                           -                (878)
Common stock issued through:
     Dividend reinvestment plan                                                   -                   -
     Stock option plan                                                            -                  38
                                                                 ------------------       --------------

Balance, June 30, 1999                                           $            (1,283)     $      35,199
                                                                 ==================       ==============

</TABLE>


See accompanying notes to consolidated financial statements.

                                       3

<PAGE>

                            FNB Corp. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                        Six Months Ended
                                                                                            June 30,
                                                                                 -------------------------------
                                                                                    1999               1998
                                                                                 ------------      -------------
                                                                                         (in thousands)
<S>                                                                              <C>               <C>
Operating Activities:
     Net income                                                                  $      2,346      $      2,263
     Adjustments to reconcile net income to net
          cash provided by operating activities:
          Depreciation and amortization of premises and equipment                        533                406
          Provision for loan losses                                                      160                270
          Deferred income taxes                                                            5                 50
          Deferred loan fees and costs, net                                               85                107
          Premium amortization and discount accretion
                 of investment securities, net                                           (49)               (37)
          Amortization of intangibles                                                      9                 12
          Net decrease (increase) in loans held for sale                               3,714             (1,517)
          Increase in other assets                                                      (290)              (393)
          Increase (decrease) in other liabilities                                      (157)               643
                                                                                 ------------      -------------
                    Net Cash Provided by Operating Activities                          6,356              1,804
                                                                                 ------------      -------------

Investing Activities:
     Available-for-sale securities:
          Proceeds from maturities and calls                                           7,430             15,377
          Purchases                                                                  (19,300)           (24,453)
     Held-to-maturity securities:
          Proceeds from maturities and calls                                           9,076             18,142
          Purchases                                                                   (1,500)           (18,776)
     Net increase in loans                                                           (13,360)            (5,138)
     Proceeds from sales of premises and equipment                                         -                  1
     Purchases of premises and equipment                                              (1,156)              (251)
     Other, net                                                                           82                 27
                                                                                 ------------      -------------
                    Net Cash Used in Investing Activities                            (18,728)           (15,071)
                                                                                 ------------      -------------

Financing Activities:
     Net increase in deposits                                                             53             19,728
     Increase in retail repurchase agreements                                          1,998              1,732
     Increase in Federal Home Loan Bank advances                                       7,000                  -
     Increase (decrease) in federal funds purchased                                    6,280             (2,400)
     Common stock issued                                                                  38                117
     Cash dividends paid                                                                (987)              (747)
                                                                                 ------------      -------------
                    Net Cash Provided by Financing Activities                         14,382             18,430
                                                                                 ------------      -------------

Net Increase in Cash and Cash Equivalents                                              2,010              5,163
Cash and cash equivalents at beginning of period                                      12,787             12,914
                                                                                 ------------      -------------

Cash and Cash Equivalents at End of Period                                       $    14,797       $     18,077
                                                                                 ============     =============
Supplemental disclosure of cash flow information:
     Cash paid during the period for:
          Interest                                                               $      5,882      $      5,280
          Income taxes                                                                   984              1,019
</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.     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:

                                       5
<PAGE>
<TABLE>
<CAPTION>
<S>     <C>

                                                Three Months Ended                    Six Months Ended
                                                     June 30,                             June 30,
                                          -------------------------------      --------------------------------
                                             1999               1998               1999               1998
                                          ------------       ------------      -------------      -------------
     Basic EPS denominator-Weighted
          average number of common
          shares outstanding                3,658,351          3,651,008          3,657,779          3,647,692
     Dilutive share effect arising from
          assumed exercise of stock options   129,274            147,814            137,565            147,711
                                            ---------          ---------          ---------          ---------

     Diluted EPS denominator                3,787,625          3,798,822          3,795,344          3,795,403
                                            =========          =========          =========          =========

4.   Loans as presented are reduced by net deferred loan fees of $522,000,
     $373,000 and $443,000 at June 30, 1999, June 30, 1998 and December 31,
     1998, respectively.

5.   Significant components of other expense were as follows:

                                                Three Months Ended                    Six Months Ended
                                                     June 30,                             June 30,
                                          -------------------------------      --------------------------------
                                             1999               1998               1999               1998
                                          ------------       ------------      -------------      -------------
                                                                     (in thousands)

Stationery, printing and supplies         $   101            $   96            $   217            $   185
Advertising and marketing                      69                89                126                210
</TABLE>
6.   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 $2,346,000 in the first six months of 1999, a
3.7% increase over the same period in 1998. Basic earnings per share increased
from $.62 to $.64 in comparing these six-month periods and diluted earnings per
share increased from $.60 to $.62. Total assets were $371,881,000 at June 30,
1999, up 7.2% from June 30, 1998 and 4.3% from December 31, 1998. Loans amounted
to $239,166,000 at June 30, 1999, increasing 6.8% from June 30, 1998 and 4.1%
from December 31, 1998. Total deposits grew 1.5% from June 30, 1998 and 0.02%
from December 31, 1998 to $304,743,000 at June 30, 1999.

EARNINGS REVIEW

         The Corporation's net income increased $83,000 or 3.7% in the first six
months of 1999 compared to the same period of 1998 and increased $24,000 or 2.0%
in comparing second quarter periods. Earnings were positively impacted in the
first six months and second quarter of 1999 by increases in net interest income
of $250,000 or 3.4% and $124,000 or 3.3%, respectively, by increases of $152,000
and $30,000 in noninterest income and by reductions of $110,000 and $15,000 in
the provision for loan losses. These gains were significantly offset, however,
by increases of $413,000 and $135,000 in noninterest expense, which was impacted
in 1999 by a major data processing conversion as discussed in "Noninterest
Expense".

         On an annualized basis, return on average assets decreased from 1.34%
in the first six months of 1998 to 1.29% in the first six months of 1999. Return
on average shareholders' equity decreased from 13.75% to 13.17% in comparing the
same periods. In comparing second quarter periods, return on average assets
decreased from 1.37% to 1.31% and return on average shareholders' equity
decreased from 14.17% to 13.41%.

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 $7,632,000 in the first six months of 1999
compared to $7,382,000 in the same period of 1998. This increase of $250,000 or
3.4% resulted primarily from a 7.2% 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 4.94% in the first six months of
1998 to 4.78% in the same period of 1999. In comparing second quarter periods,
net interest income increased $124,000 or 3.3% reflecting a 6.5%



                                        7
<PAGE>

increase in average earning assets and a decline in the net interest margin from
4.87% to 4.73%. On a taxable equivalent basis, the increases in net interest
income in the first six months and second quarter of 1999 were $298,000 and
$132,000, respectively, reflecting changes in the relative mix of taxable and
non-taxable earning assets.

         Table 1 on page 17 and Table 2 on page 18 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 by the Federal Reserve
in 1999 about inflationary pressures that appear to be building in the U.S.
economy, action was taken to raise interest rates, resulting in a 25 basis
points increase in the prime rate to the 8.00% level effective July 1, 1999.

         Following the reductions in late 1998, the prime rate averaged 7.75% in
the first six months of 1999 compared to 8.50% in the same period of 1998. The
net interest spread, in comparing six-month periods, declined by 10 basis points
from 4.19% in 1998 to 4.09% 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 46 basis points from 8.58% in
1998 to 8.12% in 1999, while the cost of funds decreased by 36 basis points from
4.39% to 4.03%. In comparing second quarter periods, the net interest spread
declined by 6 basis points from 4.11% to 4.05%, as the yield on earning assets
decreased by 47 basis points while the cost of funds decreased by 41 basis
points.

PROVISION FOR LOAN LOSSES

         This provision is the charge against earnings to provide an allowance
or reserve for potential losses inherent in the loan portfolio. The amount of
each period's charge is affected by several considerations


                                        8
<PAGE>

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 six months
and second quarter of 1999 compared to the same periods in 1998 by decreases in
the provision of $110,000 and $15,000, respectively, due primarily to the
results from evaluating the various risk factors inherent in the loan portfolio.

NONINTEREST INCOME

         Noninterest income for the first six months and second quarter of 1999
increased $152,000 or 9.8% and $30,000 or 3.6%, 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 six-month
periods primarily reflected a significant increase in sales of annuity products,
while the gain in comparing second quarter periods resulted about evenly from
increased sales of both annuity products and brokerage services. The level of
other service charges, commissions and fees was higher in comparing six-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.

NONINTEREST EXPENSE

         Noninterest expense was $413,000 or 7.6% higher in the first six months
of 1999 compared to the same period in 1998 and for the second quarter was
$135,000 or 4.9% higher, due largely to increased personnel expense, the effect
of a major data processing conversion and the continuing effects of inflation.
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. 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 $84,000 in the first six months of 1999 compared to
the same period in 1998 and $20,000 in comparing second 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, especially for
depreciation.

                                        9
<PAGE>
INCOME TAXES

         The effective income tax rate of 30.2% in the first six 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 $37,000,000
line of credit established at the Federal Home Loan Bank, less existing advances
against that line, and (e) the available-for-sale securities portfolio. Further,
while available-for-sale securities are intended to be a source of immediate
liquidity, the entire investment securities portfolio is managed to provide both
income and a ready source of liquidity. All debt securities are of investment
grade quality and, if the need arises, can be promptly liquidated on the open
market or pledged as collateral for short-term borrowing.

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

ASSET/LIABILITY MANAGEMENT AND INTEREST RATE SENSTIVITY

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

         The Bank's balance sheet was liability-sensitive at June 30, 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.

                                       10
<PAGE>

         As a specific asset/liability management tool, the Bank, at June 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 June 30, 1999, the
unamortized premium related to the interest rate floor agreement amounted to
$10,000 and had an estimated fair value of $13,000.

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 June
30, 1999, FNB Corp. and the Bank had total capital ratios of 15.94% and 15.53%,
respectively, and Tier I capital ratios of 14.89% and 14.48%.

         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 June 30, 1999, FNB
Corp. and the Bank had leverage capital ratios of 9.93% 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 June 30, 1999 and, accordingly, is well-capitalized under the regulatory
framework for prompt corrective action.

BALANCE SHEET REVIEW

         Total assets at June 30, 1999 were higher than at June 30, 1998 and
December 31, 1998 by $25,050,000 or 7.2% and $15,258,000 or 4.3%, respectively;
deposits were ahead by $4,467,000 or 1.5% and $53,000 or 0.02%. A portion of the
asset growth was funded by retail repurchase agreements, which had increased at
June 30, 1999 by $4,313,000 or 47.0% from June 30, 1998 and by $1,998,000 or
17.4% from December 31, 1998. Asset growth was also funded in the first six
months of 1999 by an initial advance of $7,000,000 from the Federal Home Loan
Bank. Average assets increased 7.5% in the first six months of 1999 compared to
the same period in 1998, while average deposits increased 4.2%, the second
quarter increases being 6.8% and 3.4%, respectively.


                                       11
<PAGE>

INVESTMENT SECURITIES

         Additions to the investment securities portfolio depend to a large
extent on the availability of investable funds that are not otherwise needed to
satisfy loan demand. During the twelve-month period ended June 30, 1999, when
the growth in total assets exceeded that for loans, the level of investment
securities was increased $10,603,000 or 11.0%, with a net increase of $2,367,000
or 2.3% occurring in the first six 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. Based on funds requirements, the Bank was a net
purchaser of funds at June 30, 1999.

LOANS

         The Corporation's primary source of revenue and largest component of
earning assets is the loan portfolio. Loans increased $15,254,000 or 6.8% during
the twelve-month period ended June 30, 1999. The net loan increase during the
first six months of 1999 was $9,444,000 or 4.1%. Average loans were $9,584,000
or 4.3% higher in the first six months of 1999 than in the same period of 1998.
The ratio of average loans to average deposits, in comparing six-month periods,
increased from 77.0% in 1998 to 77.1% in 1999. The ratio of loans to deposits at
June 30, 1999 was 78.5%.

         The commercial and agricultural loan portfolio has experienced strong
gains during both the twelve-month period ended June 30, 1999 and the first six
months of 1999. The 1-4 family residential mortgage loan portfolio has also
gained significantly during these periods. 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 $4,232,000 during the twelve-month period ended
June 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 potential 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.

                                       12
<PAGE>

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

         The following table presents an analysis of the changes in the
allowance for loan losses.
<TABLE>
<CAPTION>

                                                     Six Months Ended
                                                          June 30,
                                                  ------------------------
                                                   1999              1998
                                                  ------            ------
                                                        (in thousands)
<S>                                              <C>              <C>
 Balance at beginning of period                   $2,517           $2,294
 Charge-offs                                         181              192
 Recoveries                                           66               96
                                                 ---------       ---------
          Net loan charge-offs                       115               96
 Provision for loan losses                           160              270
                                                 ---------       ---------

 Balance at end of period                         $2,562           $2,468
                                                  ======           ======
</TABLE>

         At June 30, 1999, the Bank had impaired loans with two borrowers that
totaled $580,000, of which $402,000 was on nonaccrual status. The related
allowance for loan losses on these loans amounted to $184,000.

         Nonperforming loans were $1,213,000 in total at June 30, 1999,
nonaccrual loans and accruing loans past due 90 days or more amounting to
$558,000 and $655,000, 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 $7,001,000 during
the twelve-month period ended June 30, 1999 and $3,367,000 during the first six
months of 1999 was due to a high-yield product first introduced in the 1996
fourth quarter. Noninterest-bearing demand deposits at June 30, 1999 decreased
$3,322,000 compared to June 30, 1998, but increased $1,369,000 compared to
December 31, 1998. Average demand deposits increased $3,128,000 in the first six
months of 1999 compared to the same period in 1998. Further, the level of time
deposits obtained from governmental units fluctuates, amounting to $22,363,000,
$23,162,000 and $25,905,000 at June 30, 1999, June 30, 1998 and December 31,
1998, respectively.



                                       13

<PAGE>

BUSINESS DEVELOPMENT MATTERS

         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 on August 6, 1999.

         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 $1,995,000,
$6,227,000 and $3,745,000 at June 30, 1999, June 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.



                                       14
<PAGE>

         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.

         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 is estimated
to be approximately $200,000, the majority of such estimated cost relating to
computer equipment that may need to be replaced. Actual Year 2000 project
expenditures totaled $111,000 at June 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 $42,000 on a cumulative basis and
$27,000 for the six months ended June 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


                                       15
<PAGE>

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>
Table 1
Average Balances and Net Interest Income Analysis

<TABLE>
<CAPTION>

SIX MONTHS ENDED JUNE 30

                                                                         1999
                                                  ---------------------------------------------------
                                                                                          Average
                                                                       Interest            Rates
                                                     Average           Income/            Earned/
                                                     Balance           Expense             Paid
                                                  --------------    ---------------    --------------

<S>                                               <C>               <C>                         <C>
Earning Assets
Loans (2) (3)                                     $     233,869        $    10,078              8.67 %
Investment securities (2):
     Taxable income                                      85,159              2,878              6.76
     Non-taxable income                                  19,984                781              7.82
Federal funds sold                                        2,077                 51              4.93
                                                  --------------    ---------------    --------------
          Total earning assets                          341,089             13,788              8.12
                                                  --------------    ---------------    --------------

Cash and due from banks                                  11,738
Other assets, net                                         9,602
                                                  --------------
          Total Assets                            $     362,429
                                                  ==============

Interest-Bearing Liabilities
Interest-bearing deposits:
     NOW accounts                                 $      43,185                274              1.28
     Savings deposits                                    26,503                270              2.06
     Money market accounts                               30,583                541              3.57
     Certificates and other time deposits               163,007              4,156              5.14
Retail repurchase agreements                             12,714                240              3.80
Federal Home Loan Bank advances                           6,033                149              4.99
Federal funds purchased                                   1,181                 29              4.92
                                                  --------------    ---------------    --------------
          Total interest-bearing liabilities            283,206              5,659              4.03
                                                  --------------    ---------------    --------------

Noninterest-bearing demand deposits                      40,097
Other liabilities                                         3,495
Shareholders' equity                                     35,631
                                                  --------------
          Total Liabilities and
                 Shareholders' Equity             $     362,429
                                                  ==============

Net Interest Income and Spread                                      $      8,129                4.09 %
                                                                    ===============    ==============

Net Yield on Earning Assets                                                                     4.78 %
                                                                                       ==============


<CAPTION>
                                                                               1998
                                                        ---------------------------------------------------
                                                                                                Average
                                                                             Interest            Rates
                                                           Average            Income/           Earned/
                                                           Balance            Expense            Paid
                                                        --------------     --------------    --------------
                                                         (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                                     <C>                <C>                        <C>
Earning Assets
Loans (2) (3)                                           $     224,285      $      10,213              9.17 %
Investment securities (2):
     Taxable income                                            70,454              2,490              7.07
     Non-taxable income                                        19,404                759              7.83
Federal funds sold                                              3,896                108              5.57
                                                        --------------     --------------    --------------
          Total earning assets                                318,039             13,570              8.58
                                                        --------------     --------------    --------------

Cash and due from banks                                        10,665
Other assets, net                                               8,271
                                                        --------------
          Total Assets                                     $  336,975
                                                        ==============

Interest-Bearing Liabilities
Interest-bearing deposits:
     NOW accounts                                       $    41,070                  348              1.71
     Savings deposits                                          28,082                321              2.31
     Money market accounts                                     24,012                464              3.89
     Certificates and other time deposits                     161,100              4,391              5.50
Retail repurchase agreements                                    9,186                208              4.57
Federal Home Loan Bank advances                                     -                  -                 -
Federal funds purchased                                           241                  7              5.81
                                                        --------------     --------------    --------------
          Total interest-bearing liabilities                  263,691              5,739              4.39
                                                        --------------     --------------    --------------

Noninterest-bearing demand deposits                            36,969
Other liabilities                                               3,415
Shareholders' equity                                           32,900
                                                        --------------
          Total Liabilities and
                 Shareholders' Equity                      $  336,975
                                                        ==============

Net Interest Income and Spread                                             $      7,831               4.19 %
                                                                           ==============    ==============

Net Yield on Earning Assets                                                                           4.94 %
                                                                                             ==============


<CAPTION>







                                                                          1999 Versus 1998
                                                       ---------------------------------------------------
                                                                         Interest Variance
                                                                           due to (1)
                                                        ---------------------------------        Net
                                                           Volume              Rate             Change
                                                        --------------    ---------------    --------------

<S>                                                     <C>               <C>                <C>
Earning Assets
Loans (2) (3)                                           $         622     $         (757)     $       (135)
Investment securities (2):
     Taxable income                                               501               (113)              388
     Non-taxable income                                            23                 (1)               22
Federal funds sold                                                (46)               (11)              (57)
                                                        --------------    ---------------    --------------
          Total earning assets                                  1,100               (882)              218
                                                        --------------    ---------------    --------------

Cash and due from banks
Other assets, net

          Total Assets


Interest-Bearing Liabilities
Interest-bearing deposits:
     NOW accounts                                                  17                (91)              (74)
     Savings deposits                                             (17)               (34)              (51)
     Money market accounts                                        118                (41)               77
     Certificates and other time deposits                          52               (287)             (235)
Retail repurchase agreements                                       71                (39)               32
Federal Home Loan Bank advances                                   149                    -             149
Federal funds purchased                                            23                 (1)               22
                                                        --------------    ---------------    --------------
          Total interest-bearing liabilities                      413               (493)              (80)
                                                        --------------    ---------------    --------------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

          Total Liabilities and
                 Shareholders' Equity


Net Interest Income and Spread                         $         687     $          (389)      $        298
                                                       ==============   =================   ===============

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.

                                       17

<PAGE>

Table 2
Average Balances and Net Interest Income Analysis


THREE MONTHS ENDED JUNE 30

<TABLE>
<CAPTION>

                                                                                           1999
                                                                    ---------------------------------------------------

                                                                                                           Average
                                                                                        Interest             Rates
                                                                       Average           Income/            Earned/
                                                                       Balance           Expense             Paid
                                                                    --------------    ---------------    --------------

<S>                                                                 <C>               <C>                         <C>
Earning Assets
Loans (2) (3)                                                       $     235,868     $        5,066              8.61 %
Investment securities (2):
     Taxable income                                                        87,628              1,433              6.54
     Non-taxable income                                                    19,782                385              7.78
Federal funds sold                                                          1,883                 24              5.14
                                                                    --------------    ---------------    --------------
          Total earning assets                                            345,161              6,908              8.02
                                                                    --------------    ---------------    --------------

Cash and due from banks                                                    11,971
Other assets, net                                                           9,597
                                                                    --------------
          Total Assets                                              $     366,729
                                                                    ==============

Interest-Bearing Liabilities
Interest-bearing deposits:
     NOW accounts                                                   $      43,689                137              1.26
     Savings deposits                                                      26,840                135              2.02
     Money market accounts                                                 31,843                283              3.57
     Certificates and other time deposits                                 162,771              2,050              5.05
Retail repurchase agreements                                               13,357                129              3.86
Federal Home Loan Bank advances                                             7,000                 87              4.99
Federal funds purchased                                                       908                 12              5.25
                                                                    --------------    ---------------    --------------
          Total interest-bearing liabilities                              286,408              2,833              3.97
                                                                    --------------    ---------------    --------------

Noninterest-bearing demand deposits                                        41,013
Other liabilities                                                           3,482
Shareholders' equity                                                       35,826
                                                                    --------------
          Total Liabilities and
                 Shareholders' Equity                               $     366,729
                                                                    ==============

Net Interest Income and Spread                                                        $      4,075                4.05 %
                                                                                      ===============    ==============

Net Yield on Earning Assets                                                                                       4.73 %
                                                                                                         ==============



<CAPTION>

                                                                                              1998
                                                                       ---------------------------------------------------

                                                                                                               Average
                                                                                            Interest            Rates
                                                                          Average            Income/           Earned/
                                                                          Balance            Expense            Paid
                                                                       --------------     --------------    --------------
                                                                        (Taxable Equivalent Basis, Dollars in Thousands)
<S>                                                                    <C>                <C>                        <C>
Earning Assets
Loans (2) (3)                                                          $     225,966       $      5,133              9.11 %
Investment securities (2):
     Taxable income                                                           75,051              1,303              6.94
     Non-taxable income                                                       19,877                390              7.86
Federal funds sold                                                             3,352                 47              5.58
                                                                       --------------     --------------    --------------
          Total earning assets                                               324,246              6,873              8.49
                                                                       --------------     --------------    --------------

Cash and due from banks                                                       10,947
Other assets, net                                                              8,136
                                                                       --------------
          Total Assets                                                 $     343,329
                                                                       ==============

Interest-Bearing Liabilities
Interest-bearing deposits:
     NOW accounts                                                      $      42,385                175              1.67
     Savings deposits                                                         28,088                161              2.31
     Money market accounts                                                    24,963                243              3.90
     Certificates and other time deposits                                    162,756              2,233              5.50
Retail repurchase agreements                                                   9,870                112              4.58
Federal Home Loan Bank advances                                                    -                  -                 -
Federal funds purchased                                                          396                  6              5.75
                                                                       --------------     --------------    --------------
          Total interest-bearing liabilities                                 268,458              2,930              4.38
                                                                       --------------     --------------    --------------

Noninterest-bearing demand deposits                                           38,031
Other liabilities                                                              3,622
Shareholders' equity                                                          33,218
                                                                       --------------
          Total Liabilities and
                 Shareholders' Equity                                  $     343,329
                                                                       ==============

Net Interest Income and Spread                                                            $       3,943               4.11 %
                                                                                          ==============    ==============

Net Yield on Earning Assets                                                                                          4.87 %
                                                                                                            ==============


<CAPTION>




                                                                                           1999 Versus 1998
                                                                       ---------------------------------------------------
                                                                              Interest Variance
                                                                                  due to (1)
                                                                       ---------------------------------
                                                                                                                Net
                                                                          Volume              Rate             Change
                                                                       --------------    ---------------    --------------

<S>                                                                    <C>               <C>                <C>
Earning Assets
Loans (2) (3)                                                          $         221     $         (288)     $        (67)
Investment securities (2):
     Taxable income                                                              208                (78)              130
     Non-taxable income                                                           (2)                (3)               (5)
Federal funds sold                                                               (19)                (4)              (23)
                                                                       --------------    ---------------    --------------
          Total earning assets                                                   408               (373)               35
                                                                       --------------    ---------------    --------------

Cash and due from banks
Other assets, net

          Total Assets


Interest-Bearing Liabilities
Interest-bearing deposits:
     NOW accounts                                                                  5                (43)              (38)
     Savings deposits                                                             (7)               (19)              (26)
     Money market accounts                                                        63                (23)               40
     Certificates and other time deposits                                          -               (183)             (183)
Retail repurchase agreements                                                      36                (19)               17
Federal Home Loan Bank advances                                                   87                  -                87
Federal funds purchased                                                            7                 (1)                6
                                                                       --------------    ---------------    --------------
          Total interest-bearing liabilities                                     191               (288)              (97)
                                                                       --------------    ---------------    --------------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

          Total Liabilities and
                 Shareholders' Equity


Net Interest Income and Spread                                         $         217     $         (85)     $         132
                                                                       ==============    ==============     ==============

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>

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

                                       19
<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
21 and 22 of this report.

      (b)   Reports on Form 8-K.

            No reports on Form 8-K were filed during the quarter ended June
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: August 12, 1999                     By:   /s/ Jerry A. Little
                                                --------------------------------
                                                    Jerry A. Little
                                                    Treasurer and Secretary
                                                    (Principal Financial and
                                                    Accounting Officer)

                                       20
<PAGE>
                                INDEX TO EXHIBITS

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

   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.

                                       21
<PAGE>

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

   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 six months ended June 30, 1999.

                                       22