UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC  20549
                                 
                               FORM 10-QSB


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996

                                       OR

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
For the transition period from                to            

Commission File Number 0-13823

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

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

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

                              (910) 626-8300
           (Registrant's telephone number, including area code)
                                 
                              Not Applicable
               (Former name, former address and former
              fiscal year, if changed since last report)

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 1,803,004 shares of $2.50 par value common stock
outstanding at October 19, 1996.

Transitional Small Business Disclosure Format (Check One):  Yes       No   X    





<PAGE>


                       PART I.  FINANCIAL INFORMATION      
         
Item 1.  Financial Statements       
<TABLE>         
                                      FNB Corp. and Subsidiary         
         
                                     CONSOLIDATED BALANCE SHEETS          
                                 
<S>                                                 <C>               <C>               <C>                       
                                                               September 30,               December 31,
ASSETS                                                      1996            1995              1995
         
Cash and due from banks                              $   11,499,468    $   10,101,219    $    8,764,539
Federal funds sold                                        8,100,000         1,110,000         2,600,000 
Investment securities:          
     Available for sale, at estimated fair value         
       (amortized cost of $25,336,568,          
       $17,596,230 and $28,183,155)                      25,204,638        17,643,012        28,375,645 
     Held to maturity (estimated fair value of         
       $57,525,441, $59,266,365 and $57,008,236          58,242,929        58,927,148        56,160,814 
Loans                                                   191,148,360       179,946,120       179,922,737 
     Less:    Allowance for loan losses                  (1,959,638)       (1,918,551)       (1,902,640)
                Net loans                               189,188,722       178,027,569       178,020,097         
Premises and equipment                                    6,119,525         5,615,433         6,029,541 
Other assets                                              4,301,581         3,716,288         3,727,476 
         
                 TOTAL ASSETS                        $  302,656,863    $  275,140,669    $  283,678,112
         
LIABILITIES AND SHAREHOLDERS' EQUITY         
         
Deposits:         
  Noninterest-bearing demand deposits                $   38,841,700    $   33,645,798    $   38,590,985
  Interest-bearing deposits:          
    NOW, savings and money market deposits               80,383,848        77,882,815        78,728,366 
    Time deposits of $100,000 or more                    45,218,260        33,276,391        36,427,161 
    Other time deposits                                 103,470,397        98,470,076        96,397,964 
     Total deposits                                     267,914,205       243,275,080       250,144,476 
Retail repurchase agreements                              3,809,475         3,216,322         4,641,527 
Federal funds purchased                                       -                 -                 -
Other liabilities                                         3,017,509         3,367,950         2,897,038 
               TOTAL LIABILITIES                        274,741,189       249,859,352       257,683,041 
         
Shareholders' equity:      
     Preferred stock - $10.00 par value;       
        authorized 200,000 shares, none issued                -                 -                 -   
     Common stock - $2.50 par value;           
        authorized 5,000,000 shares, issued
        shares - 1,803,004, 1,797,734 and 1,797,995       4,507,510         4,494,335         4,494,988 
     Surplus                                                116,175            14,007            18,705 
     Retained earnings                                   23,379,063        20,742,098        21,354,335 
     Net unrealized securities gains (losses)               (87,074)           30,877           127,043 
               TOTAL SHAREHOLDERS' EQUITY                27,915,674        25,281,317        25,995,071 
         
               TOTAL LIABILITIIES AND        
                  SHAREHOLDERS' EQUITY               $  302,656,863   $  275,140,669     $  283,678,112
         
                        See accompanying notes to consolidated financial statements.
</TABLE>                                       
                                                 1
         
<PAGE>    

     
                                  FNB Corp. and Subsidiary           
                                             
                             CONSOLIDATED STATEMENTS OF INCOME       

<TABLE>

<S>                                                   <C>                         <C>       

                                                                     Nine Months Ended
                                                                        September 30, 
                                                                1996                        1995
INTEREST INCOME:                                       
     Interest and fees on loans                        $       12,366,713          $        11,542,039     
     Interest and dividends on investment securities:                      
          Taxable income                                        3,450,503                    3,063,765 
          Non-taxable income                                      568,197                      453,498 
     Federal funds sold                                            31,687                      102,400 
                    Total interest income                      16,417,100                   15,161,702 
                                             
INTEREST EXPENSE:                                      
     Deposits                                                   6,911,701                    6,461,909 
     Retail repurchase agreements                                 128,711                      113,150 
     Federal funds purchased                                       42,433                       13,431 
                    Total interest expense                      7,082,845                    6,588,490 
                                             
NET INTEREST INCOME                                             9,334,255                    8,573,212 
     Provision for loan losses                                    305,000                      350,000 
NET INTEREST INCOME AFTER PROVISION                              
     FOR LOAN LOSSES                                            9,029,255                    8,223,212 
                                             
OTHER OPERATING INCOME:                                
     Service charges on deposit accounts                        1,060,490                      996,148 
     Annuity and brokerage commissions                            148,170                      143,576 
     Credit card income                                           231,046                      187,283 
     Other service charges, commissions and fees                  219,416                      208,343 
     Losses on sales of investment securities                        -                        (414,596)
     Other income                                                 108,119                      107,964 
                    Total other operating income                1,767,241                    1,228,718 
                                             
OTHER OPERATING EXPENSE:                               
     Personnel expense                                          3,562,709                    3,310,483 
     Net occupancy expense                                        356,003                      344,790 
     Furniture and equipment expense                              495,756                      336,907 
     Data processing services                                     688,097                      645,135 
     Restructuring charges                                           -                         460,457 
     Other expense                                              1,611,122                    1,800,060 
                    Total other operating expense               6,713,687                    6,897,832 
                                             
INCOME BEFORE INCOME TAXES                                      4,082,809                    2,554,098 
Income taxes                                                    1,247,170                      735,578 
                                             
NET INCOME                                             $        2,835,639          $         1,818,520               
                                             
PER SHARE DATA:                                        
     Net income                                        $             1.57          $              1.01         
     Cash dividends declared                                          .45                          .37 
                                             
     Average number of shares outstanding                       1,801,148                    1,799,012 
                                             
                   See accompanying notes to consolidated financial statements.

</TABLE>                                             
                                                 2                   
<PAGE>                                                 

                                     FNB Corp. and Subsidiary           
                                             
                                CONSOLIDATED STATEMENTS OF INCOME       
<TABLE>

<S>                                                   <C>                          <C>

                                                                      Three Months Ended
                                                                         September 30, 
                                                                1996                         1995
INTEREST INCOME:                                       
     Interest and fees on loans                        $        4,216,451           $          4,000,995     
     Interest and dividends on investment securities:                      
          Taxable income                                        1,107,776                      1,049,443 
          Non-taxable income                                      196,396                        144,617 
     Federal funds sold                                            17,017                         34,774 
                    Total interest income                       5,537,640                      5,229,829 
                                             
INTEREST EXPENSE:                                      
     Deposits                                                   2,308,336                      2,285,120 
     Retail repurchase agreements                                  36,311                         30,992 
     Federal funds purchased                                       12,176                            323 
                    Total interest expense                      2,356,823                      2,316,435 
                                             
NET INTEREST INCOME                                             3,180,817                      2,913,394 
     Provision for loan losses                                    110,000                        130,000 
NET INTEREST INCOME AFTER PROVISION                              
     FOR LOAN LOSSES                                            3,070,817                      2,783,394 
                                             
OTHER OPERATING INCOME:                                
     Service charges on deposit accounts                          337,784                        354,329 
     Annuity and brokerage commissions                             67,280                         45,723 
     Credit card income                                            79,883                         67,438 
     Other service charges, commissions and fees                   72,773                         56,088 
     Losses on sales of investment securities                        
                                                                     -                              -
     Other income                                                  34,878                         37,351 
                    Total other operating income                  592,598                        560,929 
                                             
OTHER OPERATING EXPENSE:                               
     Personnel expense                                          1,199,743                      1,124,936 
     Net occupancy expense                                        122,182                        114,494 
     Furniture and equipment expense                              164,887                        109,633 
     Data processing services                                     231,267                        217,186 
     Restructuring charges                                          
                                                                     -                              -
     Other expense                                                587,173                        516,861 
                    Total other operating expense               2,305,252                      2,083,110 
                                             
INCOME BEFORE INCOME TAXES                                      1,358,163                      1,261,213 
Income taxes                                                      419,548                        375,949 
                                             
NET INCOME                                             $          938,615           $            885,264               
                                             
PER SHARE DATA:                                        
     Net income                                        $              .52           $                .49         
     Cash dividends declared                                          .15                            .13 
                                             
     Average number of shares outstanding                       1,802,964                      1,797,115 
                                             
                   See accompanying notes to consolidated financial statements.
</TABLE>                                             
                                                 3                   

<PAGE>


                                     FNB Corp. and Subsidiary               
                                             
                             CONSOLIDATED STATEMENTS OF CASH FLOWS   

<TABLE>

<S>                                                                   <C>                     <C>

                                                                                    Nine Months Ended
                                                                                        September 30,
                                                                                1996                    1995
OPERATING ACTIVITIES:                                  
     Net income                                                        $         2,835,639     $         1,818,520
     Adjustments to reconcile net income to net                            
          cash provided by operating activities:                           
          Depreciation and amortization of premises and equipment                  482,391                 308,024 
          Provision for loan losses                                                305,000                 350,000 
          Deferred income taxes                                                    (64,559)                (58,162)
          Deferred loan fees and costs, net                                        265,232                 (92,009)
          Premium amortization and discount accretion                      
                 of investment securities, net                                      29,998                 121,963 
          Amortization of intangibles                                               32,905                  44,336 
          Losses on sales of investment securities                                    -                    414,596 
          Net decrease (increase) in loans held for sale                             5,306                (233,600)
          Increase in other assets                                                (451,831)               (493,277)
          Increase in other liabilities                                            258,813               1,397,809 
                    NET CASH PROVIDED BY OPERATING ACTIVITIES                    3,698,894               3,578,200 
                                             
INVESTING ACTIVITES:                                   
     Available-for-sale securities:                                   
          Proceeds from sales                                                         -                  5,896,328 
          Proceeds from maturities                                              11,558,226               1,928,649 
          Purchases                                                             (8,774,291)               (249,405)
     Held-to-maturity securities:                                
          Proceeds from maturities                                              13,818,718              13,607,837 
          Purchases                                                            (15,864,280)            (20,116,148)
     Net increase in loans                                                     (11,738,996)            (11,411,849)
     Proceeds from sales of premises and equipment                                  20,320                   1,395 
     Purchases of premises and equipment                                          (685,519)               (898,935)
     Other, net                                                                    (35,653)                  5,928 
                    NET CASH USED IN INVESTING ACTIVITIES                      (11,701,475)            (11,236,200)
                                             
FINANCING ACTIVITIES:                                  
     Net increase in deposits                                                   17,769,729              13,349,768 
     Decrease in retail repurchase agreements                                     (832,052)               (309,904)
     Decrease in federal funds purchased                             
          -         (3,050,000)
     Common stock issued                                                           109,992                  16,422 
     Common stock repurchased                                                         -                    (52,800)
     Cash dividends and fractional shares paid                                    (810,159)               (432,380)
                    NET CASH PROVIDED BY FINANCING ACTIVITIES                   16,237,510               9,521,106 
                                             
NET INCREASE IN CASH AND CASH EQUIVALENTS                                        8,234,929               1,863,106 
Cash and cash equivalents at beginning of period                                11,364,539               9,348,113 
                                             
CASH AND CASH EQUIVALENTS AT END OF PERIOD                             $        19,599,468     $        11,211,219  
Supplemental disclosure of cash flow information:                     
     Cash paid during the period for:                                 
          Interest                                                     $         7,277,550     $         5,758,000    
          Income taxes                                                           1,367,131                 631,320 
          
          
                      See accompanying notes to consolidated financial statements.

</TABLE>
                                                 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 full
     banking and trust services to consumer 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 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 period.  Actual
     results could differ from those estimates.

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.   Loans as presented are increased by net deferred expense of
     $130,027 and $133,400 at September 30,  1996 and December 31, 1995,
     respectively, and are reduced by net unearned income of $55,247 at    
     September 30, 1995.

4.   Significant components of other expense were as follows:

<TABLE>
<S>                                          <C>           <C>           <C>        <C> 

                                                Three Months Ended       Nine Months Ended   
                                                    September 30,           September 30,  
                                                 1996          1995         1996      1995  

          FDIC insurance                      $  83,771     $  21,092     $101,621  $277,040
          Stationery, printing and supplies      73,960        87,519      207,895   222,899
          Deferred acquisition costs
             charged to expense                      -             -            -    113,833
</TABLE>

5.   In 1995, management adopted a comprehensive restructuring
     project for the purpose of reengineering Bank operations to
     become more competitive and cost-effective in developing
     business and servicing customers and to improve long-term
     profitability.  In connection with this project, certain
     positions within the Bank have either been realigned or
     eliminated.  It is expected that all significant project costs
     were incurred in and paid in 1995.




                                       5
<PAGE>
     A summary of the restructuring charges, all of which were
     incurred or accrued during the three months ended March 31,
     1995, is as follows:

          Retirement benefits                                    $256,266
          Other personnel costs                                    44,850
          Total personnel costs                                   301,116
          Professional fees related to restructuring project      159,341
          Total restructuring charges                            $460,457

6.   All per share data has been retroactively adjusted to reflect
     the three-for-two common stock split effected in the form of a 
     50% stock dividend paid in the second quarter of 1995.

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

                     
                                       6

<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operation


     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 $2,835,639 in the first nine months of
1996, a 55.9% increase over the same period in 1995.  Earnings per
share, adjusted for the three-for-two common stock split in 1995,
increased from $1.01 to $1.57 in comparing these nine-month periods. 
The 1995 results, especially as related to the operations of the
first quarter, were impacted by restructuring charges and losses on
sales of investment securities discussed in more detail in the
"Earnings Review" and in "Business Development matters".  Earnings
for the 1996 third quarter amounted to $938,615, which represents a
6.0% increase from the 1995 third quarter and a gain in earnings per
share from $.49 to $.52.  Results for both the first nine months and
third quarter of 1996 were negatively affected by a special
legislative assessment for FDIC insurance purposes as further
discussed in the "Earnings Review" and in "Other Operating Expense".

     Total assets were $302,656,683 at September 30, 1996, up 10.0%
from September 30, 1995 and 6.7% from December 31, 1995.  Loans
amounted to $191,148,360 at September 30, 1996, increasing 6.2% from
September 30, 1995 and 6.2% from December 31, 1995.  Total deposits
grew 10.1% from September 30, 1995 and 7.1% from December 31, 1995
to $267,914,205 at September 30, 1996.  A significant portion of
asset and deposit growth in 1996 has resulted from a deposit
promotion in the third quarter as discussed in the "Balance Sheet
Review" and in "Deposits".

     On December 30, 1993, the Corporation entered into definitive
agreements to acquire two mutual savings banks in merger/conversion
transactions, pursuant to which the savings banks would convert from
mutual to stock form and the Corporation would simultaneously
acquire the shares issued in the conversions.  In 1995, the
agreements expired without the acquisitions having been completed
due to changes in federal and state regulatory policies which
strictly limited the circumstances under which such transactions
would be permitted.

EARNINGS REVIEW

     The Corporation's net income increased $1,017,119 or 55.9% in
the first nine months of 1996 compared to the same period of 1995
and increased $53,351 or 6.0% in comparing third quarter periods. 
Earnings were negatively affected in the 1995 first quarter by
restructuring charges of $460,457 and losses on sales of investment
securities of $414,596, which were charges taken for the strategic
purposes discussed in "Business Development Matters".  Additionally,
certain costs, amounting to $113,833, that had been deferred in
connection with the proposed acquisitions discussed in the
"Overview" were charged to expense in the 1995 first quarter. 
Earnings were positively impacted in the first nine months and third
quarter of 1996 by  increases in net interest income of $761,043 or
8.9% and $267,423 or 9.2%, respectively.




                                       7
<PAGE>

     As discussed in "Other Operating Expense", earnings have been
favorably affected, since the 1995 third quarter, by a significant
reduction in the rate charged for FDIC insurance.  Due to the
passage of new legislation on September 30, 1996, however, the Bank
was assessed $74,845 on a one-time basis for its deposits that are
insured through the Savings Association Insurance Fund.  This
assessment, which was recorded on September 30, 1996 and is further
discussed in "Other Operating Expense", is part of a broad change
being implemented in connection with deposit insurance.  Compared to
the same periods of 1995 and considering the effect of the special
assessment, FDIC insurance expense was $175,419 lower in the first
nine months of 1996 and $62,679 higher in the third quarter.

     Return on average assets, affected by the restructuring charges
and losses on sales of investment securities in 1995, improved from
0.92% in the first nine months of 1995 to 1.32% in the first nine
months of 1996.  Similarly, return on average shareholders' equity
improved from 9.94% to 13.95% in comparing the same periods.  In
comparing third quarter periods, return on average assets declined
from 1.31% in 1995 to 1.30% in 1996 and return on average
shareholders' equity declined from 14.15% to 13.53%.

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 $9,334,255 in the first nine months of
1996 compared to $8,573,212 in the same period of 1995.  This
increase of $761,043 or 8.9% resulted primarily from an 8.4%
increase in the level of average earning assets coupled with an
improvement in the net yield on earning assets, or net interest
margin, from 4.85% in the first nine months of 1995 to 4.90% in the
same period of 1996.  In comparing third quarter periods, net
interest income increased $267,423 or 9.2%, reflecting a 7.2%
increase in average earning assets while the net interest margin
improved to a greater extent than for the nine-month period in
increasing from 4.84% to 4.97%.  Following a period of generally
lower interest rates which had ultimately resulted in a decline in
the net interest margin, interest rates began to increase
significantly in 1994, influenced by actions taken by the Federal
Reserve to combat a possible resurgence in inflation.  The interest
rate increases in 1994 and early 1995, later offset to some extent
by Federal Reserve action to reduce rates in the second half of 1995
and in the first quarter of 1996, have contributed to a general
improvement in the net interest margin.  Additionally, there had
been a continuing negative impact on the margin from certain
variable-rate time deposits with rate floors in excess of current
market rates.  Such variable-rate time deposits were phased out over
a two-year period that commenced in January 1994.  On a taxable
equivalent basis, the increases in net interest income in the first
nine months and third quarter of 1996 were $873,000 and $309,000,
respectively, reflecting changes in the relative mix of taxable and
non-taxable earning assets.

     Table 1 on page 15 and Table 2 on page 16 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 


                                       8
<PAGE>

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, which had been 6.00% at December 31, 1993,
moved up significantly in 1994 to close the year at 8.50% and, 
after certain changes during 1995, remained at that level at 
December 31, 1995.  The average prime for those three years amounted 
to 6.20%, 7.09% and 8.82%, respectively.  The prime rate had declined 
significantly from 1991 to 1993, but began to increase in 1994 
following steps taken by the Federal Reserve to combat a possible 
resurgence in inflation.  The prime rate increased towards the end of 
the first quarter in 1994 and an additional four times during the 
remainder of that year.  In the first quarter of 1995, it increased 
again to 9.00% and remained at that level until the second half of 
the year when, in response to actions taken by the Federal Reserve, it
decreased twice.  In the first quarter of 1996 the prime rate
decreased again to 8.25%.  The average prime was 8.29% in the first
nine months of 1996 compared to 8.85% in the same period of 1995. 
In comparing nine-month periods, the net interest spread increased
by 12 basis points from 4.02% in 1995 to 4.14% in 1996 as the result
of a slight increase in the average total yield on earning assets
coupled with a decrease in the average rate paid on interest-bearing
liabilities, or cost of funds.  The yield on earning assets
increased by 1 basis point from 8.38% in 1995 to 8.39% in 1996,
while the cost of funds decreased by 11 basis points in moving from
4.36% to 4.25%.  A comparison of third quarter periods indicates a
greater improvement of 21 basis points in the net interest spread,
which increased from 4.00% to 4.21%.  Unlike the situation for the
nine months, however, the third quarter comparison saw a decline in
the yield on earning assets, although that decline of 5 basis points
was more than offset by a decrease of 26 basis points in the cost of
funds.

Provision for Loan Losses

     This provision is the charge against earnings to provide an
allowance or reserve for possible future losses on loans.  The
amount of each period's charge is affected by several considerations 
including management's evaluation of various risk factors in determining 
the adequacy of the allowance (see "Asset Quality"), actual loan loss 
experience and loan portfolio growth.  Earnings were positively impacted 
in the first nine months and third quarter of 1996 compared to the same 
periods in 1995 by decreases in the provision of $45,000 and $20,000, 
respectively.

Other Operating Income

     Total other operating income, or noninterest income, increased
$538,523 or 43.8% in the first nine months of 1996 compared to the
same period in 1995 due principally to the recognition in the 1995
first  quarter of losses on sales of investment securities of
$414,596 (see "Business Development Matters").  In comparing third
quarter periods, noninterest income increased $31,669 or 5.6%.  The
1996 increases  reflect in part the general increase in the volume
of business.  The increase in service charges on deposit accounts in
the first nine months of 1996 resulted primarily from the
implementation of daily charges on overdraft balances in the second
quarter of 1995 and from the introduction in March 1996 of a new NOW
account version that provides a package of products and services for
a stated monthly fee.  Credit card income increased due to the
continuing development of the new credit card operation discussed in
"Business Development Matters".  The level of other service charges,
commissions and fees is higher due primarily to the implementation
in September 1996 of a fee charged to noncustomers for usage of the
Bank's automated teller machines.

                                 9

<PAGE>

Other Operating Expense

     Total other operating expense, or noninterest expense,
decreased $184,145 or 2.7% in the first nine months of 1996 compared
to the same period of 1995 due primarily to the recognition in the
1995 first quarter  of restructuring charges of $460,457 (see
"Business Development Matters") and of certain costs charged to
"other expense", amounting to $113,833, that had been deferred in
connection with proposed acquisitions (see "Overview").  In
comparing third quarter periods, noninterest expense increased
$222,142 or 10.7%.  The 1996 results, which were generally impacted
by the continuing effects of inflation, were specifically affected
by a one-time FDIC insurance assessment of $74,845 on September 30,
1996.  In total, compared to the same periods of 1995, FDIC
insurance expense decreased $175,419 in the first nine months of
1996 and increased $62,679 in the third quarter, reflecting, as
discussed below, both the effect of a major rate reduction in mid-1995 
and the one-time assessment related to new legislation enacted
on September 30, 1996.

     The levels of certain expenses, including personnel, are being
favorably affected by the comprehensive project undertaken in 1995
for the reengineering of Bank operations (see "Business Development
Matters").  Despite an increase in the volume of business, the
average number of full-time equivalent employees for the first nine
months of 1996 is approximately equal to that for the same period of
1995.  As is the situation for other operating expenses, however,
personnel expense is subject to the continuing effects of inflation
through normal salary adjustments and higher costs of fringe
benefits.  Personnel expense is also being impacted in 1996 by
changes in the incentive compensation program.  Furniture and
equipment expense has increased due to a higher level of
depreciation charges associated primarily with computer equipment
purchases in 1995 (see "Business Development Matters").

     Because of the Federal Deposit Insurance Corporation
Improvement Act (FDICIA) enacted in 1989, FDIC insurance expense
was increased substantially, with the Bank's expense amounting to
$503,379 in the year ended December 31, 1994 and $255,948 in the
first six months of 1995.  The FDIC currently has two separate
insurance funds, which are the Bank Insurance Fund (BIF) and the
Savings Association Insurance Fund (SAIF).  As provided by FIDICA,
the insurance assessment rate could be lowered once a fund has
reached a mandated 1.25 percent reserve ratio.  Although the SAIF
fund did not reach the mandated reserve ratio, the BIF fund was
found in the third quarter of 1995 to have reached this level by
the end of May 1995.  Accordingly, the BIF rate was reduced
effective June 1, 1995, resulting in only a minimum annual charge
of $2,000 for the majority of financial institutions with 
BIF-insured deposits.  Since most of the Bank's deposits are insured
through BIF, the Bank experienced a significant reduction in FDIC
insurance expense commencing in the 1995 third quarter when the
effect of the rate adjustment was initially recorded. 
Consequently, FDIC insurance expense for the entire 1995 year and
for the first nine months of 1995 amounted to only $281,894 and
$277,040, respectively, with the expense for the first nine months
of 1996, excluding the effect of the one-time assessment of
$74,845, amounting to $26,776.

     The Deposit Insurance Funds Act of 1996 (DIFA) was enacted on
September 30, 1996 and has three main components.  The first
includes both a one-time assessment on SAIF deposits to capitalize
the SAIF fund to the mandated 1.25 percent reserve ratio and a
separate refund of all excess SAIF premiums paid for the 1996 fourth
quarter.  The second is a requirement that the repayment of the
Financing Corporation (FICO) bonds be shared by both banks and
thrifts.  The third is the ultimate elimination of the BIF and SAIF
funds by merging them into a new Deposit Insurance Fund.  The 
one-time assessment on the Bank's SAIF deposits, which amounted to
$74,845, was determined on the date of enactment and expensed at
that time.  Under the provisions of DIFA for the refund of all
excess SAIF premiums, it is expected that all SAIF premiums that the
Bank has paid for the 1996 fourth quarter will be refunded,
effectively eliminating all FDIC insurance expense for that period. 
Beginning January 1, 1997, FDIC insurance premiums will be assessed
for FICO 

                                10

<PAGE>

bond purposes at an estimated rate of $.0644 per $100 for SAIF
deposits and a rate equal to one-fifth of that, or $.0129 per $100,
for BIF deposits.  Additional premiums could be assessed in order to
maintain the BIF and SAIF funds at the required 1.25 percent reserve
ratio.  Based on the Bank's deposits at September 30, 1996, the
total annual FDIC assessment for FICO bond purposes could amount to
approximately $42,000 in 1997.

Income Taxes

     The effective income tax rate increased from 28.8% in the first
nine months of 1995 to 30.5% in the same period of 1996 due
principally to an increase in the ratio of taxable to tax-exempt
income.

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 four 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 and (d)
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.  The
average portfolio life of debt securities is approximately four and
three-fourths years, resulting in a substantial level of maturities
each year.  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.

     In line 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 on a solid
core of local deposits and the Bank's strong capital position.  To
date, the steady increase in deposits, retail repurchase agreements
and capital 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 SENSITIVITY

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

     The Bank's balance sheet is liability-sensitive, meaning that
in a given period there will be 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 30 days are NOW, savings, and money market
deposits totaling $80,384,000 as of September 30, 1996.  These 

                                11

<PAGE>

types of deposits historically have not repriced coincidentally
with or in the same proportion as general market indicators.

CAPITAL ADEQUACY

     Under guidelines established by the Federal Reserve Board,
capital adequacy is currently measured for regulatory purposes by
certain risk-based capital ratios, supplemented by a leverage ratio. 
The risk-based capital ratios are determined by expressing allowable
capital amounts, defined in terms of Tier 1 and Tier 2, 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 1 capital
consists primarily of common shareholders' equity and qualifying
perpetual preferred stock, net of goodwill and other disallowed
intangible assets.  Tier 2 capital, which is limited to the total of
Tier 1 capital, includes allowable amounts of subordinated debt,
mandatory convertible securities, preferred stock and the allowance
for loan losses.  Under current requirements, the minimum Tier 1
capital ratio is 4% and the minimum total capital ratio, consisting
of both Tier 1 and Tier 2 capital, is 8%.  At September 30, 1996,
the Corporation had a Tier 1 capital ratio of 14.64% and a total
capital ratio of 15.67%.

     The leverage ratio, which serves as a minimum capital standard,
considers Tier 1 capital only and is expressed as a percentage of
average total assets for the most recent quarter, after reduction of
those assets for goodwill and other disallowed intangible assets at
the measurement date.  The required ratio ranges from 3% to 5%,
subject to federal bank regulatory evaluation of the organization's
overall safety and soundness.  At September 30, 1996, the
Corporation had a leverage ratio of 9.67%.

BALANCE SHEET REVIEW

     Total assets at September 30, 1996 were higher than at
September 30, 1995 and December 31, 1995 by $27,516,000 or 10.0%
and $18,979,000 or 6.7%, respectively; deposits were ahead by
$24,639,000 or 10.1% and $17,770,000 or 7.1%.  Due largely to a
deposit promotion as discussed in "Deposits" below, growth was
particularly significant in the 1996 third quarter with assets
increasing $14,915,000 or 5.2% and deposits increasing $13,500,000
or 5.3%.  Average  assets increased $22,393,000 or 8.5% in the
first nine months of 1996 compared to the same period in 1995,
while average deposits increased $17,691,000 or 7.5%; the third
quarter increases being $18,950,000 or 7.0% and $14,801,000 or
6.2%, respectively.

Investment Securities

     Additions to the investment securities portfolio depend to a
large extent on the availability of investable funds that are not
otherwise needed to satisfy loan demand.  During the twelve-month
period ended September 30, 1996, when the growth in total assets
significantly exceeded that for loans, the level of investment
securities was increased $6,878,000 or 9.0%.  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.  The
$8,100,000 balance of federal funds sold at September 30, 1996
reflects the temporary investment of a portion of the proceeds of a
deposit promotion (see "Deposits") in the 1996 third quarter.

Loans

     The Corporation's primary source of revenue and largest
component of earning assets is the loan portfolio.  Loans increased
$11,202,000 or 6.2% during the twelve-month period ended September
30, 1996.  

                                 12

<PAGE>

The net loan increase during the first nine months of 1996 was
$11,225,000 or 6.2%.  Average loans were $13,239,000 or 7.7% higher
in the first nine months of 1996 than in the same period of 1995. 
The ratio of average loans to average deposits, in comparing 
nine-month periods, increased from 73.3% in 1995 to 73.4% in 1996.  
The ratio of loans to deposits at September 30, 1996 was 71.3%.

     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 $9,315,332
during the first nine months of 1996.  Consequently, total consumer
loans declined significantly during both that period and the 
twelve-month period ended September 30, 1996.  Other consumer loan
elements, including credit cards and home equity lines of credit,
have continued to grow.  Changes in the credit card operation are
discussed in "Business Development Matters".  The commercial loan
portfolio and the residential construction and mortgage loan
portfolio have each experienced strong gains during the last twelve
months and also during the first nine months of 1996.

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.  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.  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.

     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 minimal.

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.  A promotion that offered
premium-rate certificates of deposit, based on a selected maturity,
has resulted in a significant portion of the $13,088,000 increase in
time deposits during the 1996 third quarter.  Certain variable-rate
time deposits with minimum rates in excess of current market rates
were phased out over a two-year period that commenced in January
1994.  A retail repurchase agreements program, established in the
second quarter of 1994, has tended to transfer funds away from
deposits.  The balance of retail repurchase agreements was
$3,809,000 at September 30, 1996 and $3,216,000 at September 30,
1995.  Further, the level of time deposits obtained from
governmental units fluctuates, amounting to $20,673,000,
$17,520,000, $15,248,000 and $17,820,000 at September 30, 1996, June
30, 1996, September 30, 1995 and December 31, 1995, respectively.

                                  13
<PAGE>

BUSINESS DEVELOPMENT MATTERS

     As discussed in the "Overview", the Corporation had entered
into definitive agreements to acquire two mutual savings banks.  In
1995, the agreements expired without the acquisitions having been
completed due to changes in federal and state regulatory policies
which strictly limited the circumstances under which such
transactions would be permitted.

     During 1994, a new credit card operation was established in
which the Bank carries its own credit card receivables as opposed to
the former fee-based arrangement under which accounts were generated
for and owned by a correspondent bank.  As part of the new credit
card strategy, extensive marketing efforts were undertaken in 1995,
primarily to Bank customers.  Additionally, the merchant aspect of
credit card operations has been shifted to an in-house basis from
the prior correspondent arrangement.

     In a significant 1994 development, the Bank elected to
outsource all of its data processing, item capture and statement
rendering operations.  The conversion to a service bureau
arrangement was completed in the 1994 fourth quarter.  The major
items of data processing equipment that were no longer needed by the 
Bank were acquired by the new processor.  While the Bank does not
currently plan to resume any major data processing operations, 
the level of computer equipment was significantly increased in 
1995 through expanded use of personal computer networks.  
The new networks allow for a more direct input of basic loan and 
deposit account information to the data files maintained by the 
service bureau.  Capital expenditures in 1995, which totaled 
$1,302,230, related primarily to the increase in computer equipment.  
Since most of this equipment was not placed into service until late 
in 1995, the full effect on annual depreciation expense is being 
initially recognized in 1996.

     In 1995, as discussed in Note 5 to Consolidated Financial
Statements, management adopted a comprehensive restructuring project
for the purpose of reengineering Bank operations to become more
competitive and cost-effective in developing business and servicing
customers and to improve long-term profitability.  In connection
with this project, certain positions within the Bank have either
been realigned or eliminated.  Total restructuring charges in 1995
(all recorded in the first quarter), with the expectation that all
significant costs were incurred and paid within that year, amounted
to $460,457, of which $301,116 related to personnel costs and
$159,341 to professional fees.  The Bank also decided in March 1995
to recognize losses of $414,596 from the sales of certain investment
securities held in the available-for-sale portfolio in order to gain
favorable tax treatment for the losses and to take advantage of
reinvestment opportunities at higher coupon rates.  While these
actions had a significant adverse impact on 1995 earnings,
management believes these decisions will enhance the long-term value
of the Corporation and strengthen the competitive position of its
community banking operations.

     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 $33,525,143 at December 31,
1995 and $24,209,811 at September 30, 1996.  While there will be no
purchases of new contracts, current plans call for the collection of
outstanding loans based on their contractual terms.  It is expected
that the funds previously invested in this loan program will be
redeployed, as loan payments occur, to other loan programs or to the
investment securities portfolio.


                                   14

<PAGE>              

TABLE 1                                                                    
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS      
(Taxable Equivalent Basis, Dollars in Thousands)                           

<TABLE>

<S>                            <C>             <C>            <C>            <C>            <C>            <C>
                                                  1996                                         1995                
NINE MONTHS ENDED SEPTEMBER 30                                 Average                                      Average   
                                                Interest       Rates                         Interest       Rates          
                                 Average        Income/        Earned/        Average        Income/        Earned/        
                                 Balance        Expense        Paid           Balance        Expense        Paid      
                                                                                          
EARNING ASSETS                                                                            
Loans (2) (3)                   $ 185,168       $   12,403        8.92 %      $ 171,929      $   11,589        9.01 %
Investment securities:                                                                              
     Taxable income                70,215            3,685        7.00           64,614           3,241        6.69
     Non-taxable income (2)        13,934              889        8.50           10,274             710        9.21
Federal funds sold                    812               32        5.20            2,318             102        5.91
          Total earning assets    270,129           17,009        8.39          249,135          15,642        8.38 
                                                                                      
Cash and due from banks             9,130                                         9,130                          
Other assets, net                   8,096                                         6,697                          
          TOTAL ASSETS          $ 287,355                                     $ 264,962                
                                                                                     
INTEREST-BEARING LIABILITIES                                                                        
Interest-bearing deposits:                                                                           
     NOW accounts               $  34,584              505        1.94        $  32,142             513       2.13
     Savings deposits              30,333              577        2.53           29,931             646       2.89
     Money market accounts         15,934              325        2.71           16,783             386       3.08
     Certificates and other 
        time deposits             136,038            5,505        5.39          119,831           4,917       5.49
Retail repurchase agreements        3,957              129        4.33            3,004             113       5.04
Federal funds purchased             1,017               42        5.56              310              14       5.79
          Total interest-bearing 
            liabilities           221,863            7,083        4.25          202,001           6,589       4.36
                                                                                      
Noninterest-bearing demand 
  deposits                         35,478                                        35,989                          
Other liabilities                   2,906                                         2,585                          
Shareholders' equity               27,108                                        24,387                         
     TOTAL LIABILITIES AND                                                                          
       SHAREHOLDERS' EQUITY     $ 287,355                                     $ 264,962                          
                                                                                          
NET INTEREST INCOME AND SPREAD                 $    9,926        4.14 %                      $    9,053       4.02 %
                                                                                          
NET YIELD ON EARNING ASSETS                                      4.90      %                                  4.85 %
                                                                                          
(1)     The mix variance, not separately stated, has been proportionally allocated to the volume and rate 
        variances based on their absolute dollar amount.
                                                                                          
(2)     Interest income and yields related to certain investment securities and loans exempt from both 
        federal and state income tax or from state income tax alone are stated on a fully taxable 
        equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced by the
        nondeductible portion of interest expense.
                                                                                          
(3)     Nonaccrual loans are included in the average loan balance.  Loan fees and the incremental 
        direct costs associated with making loans are deferred and subsequently recognized over the 
        life of the loan as an adjustment of interest income.                                            

</TABLE>                                                                        
                                                         15(a)
<PAGE>                                                                         
                                                                             
TABLE 1                                                
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS        
(Taxable Equivalent Basis, Dollars in Thousands)                           

<TABLE>

<S>                               <C>                 <C>              <C>    
                                                  
NINE MONTHS ENDED SEPTEMBER 30                          1996 Versus 1995
                                            Interest Variance 
                                                 due to (1)              Net
                                      Volume               Rate          Change
                                                  
EARNING ASSETS                                    
Loans (2) (3)                      $       926         $       (112)    $       814    
Investment securities:                                      
     Taxable income                        289                  155             444 
     Non-taxable income (2)                237                  (58)            179 
Federal funds sold                         (59)                 (11)            (70)
          Total earning assets           1,393                  (26)          1,367 
                                                  
Cash and due from banks                                     
Other assets, net                                           
          TOTAL ASSETS                                      
                                                  
INTEREST-BEARING LIABILITIES                                
Interest-bearing deposits:                                       
     NOW accounts                           39                  (47)             (8)
     Savings deposits                        9                  (78)            (69)
     Money market accounts                 (18)                 (43)            (61)
     Certificates and other time 
       deposits                            677                  (89)            588 
Retail repurchase agreements                33                  (17)             16 
Federal funds purchased                     29                   (1)             28 
          Total interest-bearing 
            liabilities                    769                 (275)            494 
                                                  
Noninterest-bearing demand deposits                              
Other liabilities                                           
Shareholders' equity                                        
  TOTAL LIABILITIES AND                                  
    SHAREHOLDERS' EQUITY                            
                                                  
NET INTEREST INCOME AND SPREAD      $      624          $       249     $       873    
                                                  
NET YIELD ON EARNING ASSETS                                 
                                                  
(1)     The mix variance, not separately stated, has been proportionally allocated 
        to the volume and rate variances based on their absolute dollar amount.
                                                  
(2)     Interest income and yields related to certain investment securities and 
        loans exempt from both federal and state income tax or from state income 
        tax alone are stated on a fully taxable equivalent basis, assuming a 34% 
        federal tax rate and applicable state tax rate, reduced by the nondeductible 
        portion of interest expense.
                                                  
(3)     Nonaccrual loans are included in the average loan balance.  Loan fees and 
        the incremental direct costs associated with making loans are deferred and 
        subsequently recognized over the life of the loan as an adjustment of 
        interest income.                  

</TABLE>                                                                        

                                                         15(b)
<PAGE>                                                 
                                                  
TABLE 2                                                                      
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS        
(Taxable Equivalent Basis, Dollars in Thousands)                          
                                                                        
<TABLE>

<S>                               <C>            <C>            <C>            <C>            <C>            <C>
                                                    1996                                         1995           
THREE MONTHS ENDED SEPTEMBER 30                                  Average                                      Average
                                                  Interest       Rates                         Interest       Rates  
                                   Average        Income/        Earned/        Average        Income/        Earned/
                                   Balance        Expense        Paid           Balance        Expense        Paid 
                                                                                     
EARNING ASSETS                                                                        
Loans (2) (3)                      $  187,263     $    4,229     8.98 %         $  176,324     $    4,014     9.05 %
Investment securities:                                                                         
     Taxable income                    68,506          1,185     6.92               64,299          1,115     6.93
     Non-taxable income (2)            14,715            307     8.35               10,429            226     8.66
Federal funds sold                      1,291             17     5.23                2,414             34     5.72
          Total earning assets        271,775          5,738     8.41              253,466          5,389     8.46
                                                                                    
Cash and due from banks                 9,421                                        9,372                        
Other assets, net                       8,046                                        7,454                        
          TOTAL ASSETS             $  289,242                                   $  270,292                    
                                                                                     
INTEREST-BEARING LIABILITIES                                                             
Interest-bearing deposits:                                                                          
     NOW accounts                  $   34,653            156     1.79           $   32,260            175     2.15
     Savings deposits                  30,159            186     2.44               29,612            207     2.78
     Money market accounts             15,655            105     2.65               15,201            116     3.02
     Certificates and other 
       time deposits                  138,153           1,861    5.35              126,334          1,787     5.61
Retail repurchase agreements            3,375              37    4.27                2,548             31     4.83
Federal funds purchased                   871              12    5.55                   23              1     5.57
  Total interest-bearing                      
    liabilities                       222,866           2,357    4.20              205,978          2,317     4.46
                                                                                     
Noninterest-bearing demand deposits    35,862                                       36,274                      
Other liabilities                       2,765                                        3,018                        
Shareholders' equity                   27,749                                       25,022                      
  TOTAL LIABILITIES AND                                                                     
    SHAREHOLDERS' EQUITY           $  289,242                                   $  270,292                    
                                                                                     
NET INTEREST INCOME AND SPREAD                    $     3,381    4.21 %                        $    3,072     4.00 %
                                                                                     
NET YIELD ON EARNING ASSETS                                      4.97 %                                       4.84 %
                                                                                     
(1)     The mix variance, not separately stated, has been proportionally allocated to the volume and rate 
        variances based on their absolute dollar amount.
                                                                                     
(2)     Interest income and yields related to certain investment securities and loans exempt from both 
        federal and state income tax or from state income tax alone are stated on a fully taxable 
        equivalent basis, assuming a 34% federal tax rate and applicable state tax rate, reduced
        by the nondeductible portion of interest expense.
                                                                                     
(3)     Nonaccrual loans are included in the average loan balance.  Loan fees and the incremental 
        direct costs associated with making loans are deferred and subsequently recognized over 
        the life of the loan as an adjustment of interest income.             

</TABLE>                                                                        

                                                         16(a)       
                                                         
<PAGE>

TABLE 2                                                
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS         
(Taxable Equivalent Basis, Dollars in Thousands)                           

<TABLE>

<S>                               <C>                      <C>                     <C> 
                                                  
THREE MONTHS ENDED SEPTEMBER 30                             1996 Versus 1995
                                                  Interest Variance 
                                                      due to (1)                         Net
                                           Volume                    Rate                Change
                                                  
EARNING ASSETS                                         
Loans (2) (3)                      $         246            $        (31)           $         215      
Investment securities:                                 
     Taxable income                           72                      (2)                      70 
     Non-taxable income (2)                   89                      (8)                      81 
Federal funds sold                           (14)                     (3)                     (17)
          Total earning assets               393                     (44)                     349 
                                                  
Cash and due from banks                                     
Other assets, net                                           
          TOTAL ASSETS                                      
                                                  
INTEREST-BEARING LIABILITIES                                
Interest-bearing deposits:                                       
     NOW accounts                             12                     (31)                     (19)
     Savings deposits                          4                     (25)                     (21)
     Money market accounts                     3                     (14)                     (11)
     Certificates and other time deposits    159                     (85)                      74 
Retail repurchase agreements                  10                      (4)                       6 
Federal funds purchased                       11                       -                       11 
          Total interest-bearing 
            liabilities                      199                    (159)                      40 
                                                  
Noninterest-bearing demand deposits                              
Other liabilities                                           
Shareholders' equity                                        
  TOTAL LIABILITIES AND                                  
     SHAREHOLDERS' EQUITY                                 
                                                  
NET INTEREST INCOME AND SPREAD     $        194             $        115            $         309 
                                                  
NET YIELD ON EARNING ASSETS                                 
                                                  
(1)     The mix variance, not separately stated, has been proportionally allocated to the 
        volume and rate variances based on their absolute dollar amount.      
                                                  
(2)     Interest income and yields related to certain investment securities and loans exempt 
        from both federal and state income tax or from state income tax alone are stated on 
        a fully taxable equivalent basis, assuming a 34% federal tax rate and applicable 
        state tax rate, reduced by the nondeductible portion of interest expense.
                                                  
(3)     Nonaccrual loans are included in the average loan balance.  Loan fees and the 
        incremental direct costs associated with making loans are deferred and subsequently 
        recognized over the life of the loan as an adjustment of interest income.   
                      
</TABLE>                      

                                                         16(b)

<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 18 and 19 of this report.

        (b)  Reports on Form 8-K.
          
             No reports on Form 8-K were filed during the quarter ended
             September 30, 1996.


                                        


                                                                     
                                  SIGNATURES

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

                                   FNB Corp.
                                   (Registrant)


Date:     November 8, 1996                   By:  /s/ Jerry A. Little           
                                             Jerry A. Little
                                             Treasurer and Secretary
                                             (Principal Financial and 
                                             Accounting Officer)


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                                   FNB CORP.

                               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 March 16, 1985.

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

    3.20                 Amended and Restated Bylaws of the Registrant,
                         adopted May 9, 1995, incorporated herein by 
                         reference to Exhibit 3.20 to the Registrant's 
                         Form 10-QSB Quarterly Report for the quarter ended
                         June 30, 1995.

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

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

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

   10.20                 Copy of Split Dollar Insurance Agreement dated
                         as of May 28, 1989 between First National Bank and 
                         Trust Company and James M. Culberson, Jr., 
                         incorporated herein by reference to Exhibit 10.30
                         to the Registrant's Form 10-K Annual Report for the 
                         fiscal year ended December 31, 1989.

   10.30                 Copy of Stock Compensation Plan adopted May 11, 1993, 
                         incorporated herein by reference to Exhibit 10.40 to 
                         the Registrant's Form 10-QSB Quarterly Report for the 
                         quarter ended June 30, 1993.





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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 FNB Corp. Savings Institutions Management 
                         Stock Compensation Plan adopted May 10, 1994, 
                         incorporated herein by reference to Exhibit 10.40 
                         to the Registrant's Form 10-QSB Quarterly Report 
                         for the quarter ended June 30, 1994.

   10.50                 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.




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