<PAGE>

                                  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 March 31, 2002

                         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 4,755,472 shares of $2.50 par value common stock outstanding
at May 3, 2002.

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                            FNB Corp. and Subsidiary

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                            March 31, (unaudited)  December 31,
                                                           ----------------------
                                                             2002         2001         2001
                                                           ---------    ---------    ---------
                                                            (in thousands, except share data)
<S>                                                        <C>          <C>          <C>
ASSETS
Cash and due from banks                                    $   9,393    $  12,067    $  13,490
Federal funds sold                                            12,383        5,139          127
Investment securities - Available for sale
     (amortized cost of $170,287, $150,574 and $161,685)     168,035      151,920      163,150
Loans:
     Loans held for sale                                       2,507        2,040       12,836
     Loans held for investment                               378,099      386,484      378,796
     Less allowance for loan losses                           (4,573)      (4,351)      (4,417)
                                                           ---------    ---------    ---------
                     Net loans                               376,033      384,173      387,215
                                                           ---------    ---------    ---------
Premises and equipment, net                                   10,428        9,359       10,268
Other assets                                                  21,729       18,733       19,492
                                                           ---------    ---------    ---------

                     Total Assets                          $ 598,001    $ 581,391    $ 593,742
                                                           =========    =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
     Noninterest-bearing demand deposits                   $  54,002    $  45,609    $  49,089
     Interest-bearing deposits:
          Demand, savings and money market deposits          152,545      130,778      140,496
          Time deposits of $100,000 or more                  110,345      100,023      109,187
          Other time deposits                                176,337      202,229      181,458
                                                           ---------    ---------    ---------
                     Total deposits                          493,229      478,639      480,230
Retail repurchase agreements                                  13,697       12,585       14,812
Federal Home Loan Bank advances                               30,000       25,000       30,000
Federal funds purchased                                           --           --        6,000
Other liabilities                                              6,692        7,655        6,793
                                                           ---------    ---------    ---------
                     Total Liabilities                       543,618      523,879      537,835
                                                           ---------    ---------    ---------
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 - 4,750,447, 5,065,942 and 4,763,261         11,876       12,665       11,908
     Surplus                                                      --        2,885           --
     Retained earnings                                        43,994       41,073       43,032
     Accumulated other comprehensive income (loss)            (1,487)         889          967
                                                           ---------    ---------    ---------
                     Total Shareholders' Equity               54,383       57,512       55,907
                                                           ---------    ---------    ---------

                     Total Liabilities and
                            Shareholders' Equity           $ 598,001    $ 581,391    $ 593,742
                                                           =========    =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       1

<PAGE>

                            FNB Corp. and Subsidiary

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                         March 31, (unaudited)
                                                        -----------------------
                                                           2002         2001
                                                        ----------   ----------
                                                         (in thousands, except
                                                            per share data)
<S>                                                     <C>          <C>
Interest Income
     Interest and fees on loans                         $    6,756   $    8,551
     Interest and dividends on investment securities:
          Taxable income                                     2,220        1,798
          Non-taxable income                                   297          243
     Other interest income                                      29           85
                                                        ----------   ----------
                    Total interest income                    9,302       10,677
                                                        ----------   ----------

Interest Expense
     Deposits                                                3,108        5,336
     Retail repurchase agreements                               62          124
     Federal Home Loan Bank advances                           361          281
     Federal funds purchased                                     3           28
                                                        ----------   ----------
                    Total interest expense                   3,534        5,769
                                                        ----------   ----------

Net Interest Income                                          5,768        4,908
     Provision for loan losses                                 510          120
                                                        ----------   ----------
Net Interest Income After Provision for Loan Losses          5,258        4,788
                                                        ----------   ----------

Noninterest Income
     Service charges on deposit accounts                       672          581
     Annuity and brokerage commissions                          54           61
     Cardholder and merchant services income                   164          138
     Other service charges, commissions and fees               200          192
     Bank owned life insurance                                 152          157
     Net gain on sales of loans                                412          254
     Other income                                               34           43
                                                        ----------   ----------
                    Total noninterest income                 1,688        1,426
                                                        ----------   ----------

Noninterest Expense
     Personnel expense                                       2,555        2,189
     Net occupancy expense                                     247          201
     Furniture and equipment expense                           371          356
     Data processing services                                  197          167
     Other expense                                           1,055          926
                                                        ----------   ----------
                    Total noninterest expense                4,425        3,839
                                                        ----------   ----------

Income Before Income Taxes                                   2,521        2,375
Income taxes                                                   716          693
                                                        ----------   ----------

Net Income                                              $    1,805   $    1,682
                                                        ==========   ==========

Net income per common share:
     Basic                                              $      .38   $      .33
     Diluted                                                   .37          .33
                                                        ==========   ==========

Weighted average number of shares outstanding:
     Basic                                               4,761,448    5,062,591
     Diluted                                             4,869,589    5,141,393
                                                        ==========   ==========

Cash dividends declared per common share                $      .14   $      .12
                                                        ==========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       2

<PAGE>

                            FNB Corp. and Subsidiary

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

              Three Months Ended March 31, 2002 and March 31, 2001

<TABLE>
<CAPTION>
                                                                                                          Accumulated
                                                                                                             Other
                                                                                                         Comprehensive
                                                           Common Stock                        Retained      Income
                                                    -------------------------
                                                       Shares      Amount        Surplus       Earnings      (Loss)      Total
                                                    -----------  -----------   ------------  -----------    ---------  ----------
                                                                             (in thousands, except share data)
<S>                                                  <C>          <C>          <C>           <C>            <C>         <C>
Balance, December 31, 2000                           5,059,641   $    12,649    $     2,836  $     40,000    $  (363)  $   55,122
Comprehensive income:
     Net income                                              -             -              -         1,682          -        1,682
     Other comprehensive income:
          Unrealized securities gains,
               net of income taxes of $643                   -             -              -             -      1,252        1,252
                                                                                                                       ----------
     Total comprehensive income                              -             -              -             -          -        2,934
                                                                                                                       ==========
Cash dividends declared                                      -             -              -          (609)         -         (609)
Common stock issued through:
     Stock option plan                                   6,301            16             49             -          -           65
                                                    ----------   -----------    -----------  ------------    -------   ----------

Balance, March 31, 2001                              5,065,942   $    12,665    $     2,885  $     41,073    $   889   $   57,512
                                                    ==========   ===========    ===========  ============    =======   ==========



Balance, December 31, 2001                           4,763,261   $    11,908    $         -  $     43,032    $   967   $   55,907
Comprehensive income:
     Net income                                              -             -              -         1,805          -        1,805
     Other comprehensive income:
          Unrealized securities losses,
               net of income tax benefit of $1,263           -             -              -             -     (2,454)      (2,454)
                                                                                                                       ----------
     Total comprehensive loss                                -             -              -             -          -         (649)
                                                                                                                       ----------
Cash dividends declared                                      -             -              -          (662)         -         (662)
Common stock issued through:
     Stock option plan                                   4,429            11             33             -          -           44
Common stock repurchased                               (17,243)          (43)           (33)         (181)         -         (257)
                                                    ----------   -----------    -----------  ------------    -------   ----------

Balance, March 31, 2002                              4,750,447   $    11,876    $         -  $     43,994    $(1,487)  $   54,383
                                                    ==========   ===========    ===========  ============    =======   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        3

<PAGE>
                            FNB Corp. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                    March 31, (unaudited)
                                                                                 ---------------------------
                                                                                    2002             2001
                                                                                 ----------       ----------
                                                                                         (in thousands)
<S>                                                                              <C>              <C>
Operating Activities:
  Net income                                                                      $  1,805         $  1,682
  Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation and amortization of premises and equipment                            306              285
    Provision for loan losses                                                          510              120
    Deferred income taxes (benefit)                                                    (10)              88
    Deferred loan fees and costs, net                                                  (71)             (22)
    Premium amortization and discount accretion
        of investment securities, net                                                    9                5
    Amortization of intangibles                                                         --                3
    Net decrease in loans held for sale                                             10,329            7,830
    Increase in other assets                                                          (661)          (1,065)
    Increase in other liabilities                                                       48              613
                                                                                  --------         --------
          Net Cash Provided by Operating Activities                                 12,265            9,539
                                                                                  --------         --------

Investing Activities:
  Available-for-sale securities:
    Proceeds from maturities and calls                                               9,091           18,336
    Purchases                                                                      (17,711)         (35,971)
  Net decrease (increase) in loans held for investment                                 131             (989)
  Purchases of premises and equipment                                                 (492)             (48)
  Other, net                                                                            15                7
                                                                                  --------         --------
          Net Cash Used in Investing Activities                                     (8,966)         (18,665)
                                                                                  --------         --------

Financing Activities:
  Net increase in deposits                                                          12,999            6,191
  Increase (decrease) in retail repurchase agreements                               (1,115)           1,384
  Increase in Federal Home Loan Bank advances                                           --           10,000
  Decrease in federal funds purchased                                               (6,000)          (4,750)
  Common stock issued                                                                   44               65
  Common stock repurchased                                                            (257)              --
  Cash dividends paid                                                                 (811)            (760)
                                                                                  --------         --------
          Net Cash Provided by Financing Activities                                  4,860           12,130
                                                                                  --------         --------

Net Increase in Cash and Cash Equivalents                                            8,159            3,004
Cash and cash equivalents at beginning of period                                    13,617           14,202
                                                                                  --------         --------

Cash and Cash Equivalents at End of Period                                        $ 21,776         $ 17,206
                                                                                  ========         ========
Supplemental disclosure of cash flow information:
  Cash paid during the period for:
       Interest                                                                   $  4,169         $  5,588
       Income taxes (refund)                                                           (63)             463
  Noncash transactions:
       Transfer of held-to-maturity securities to available-for-sale securities         --           59,361
       Foreclosed loans transferred to other real estate                               168              306
       Unrealized securities gains (losses), net of income taxes                    (2,454)           1,252
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4

<PAGE>

                            FNB Corp. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Basis of Presentation

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

         The 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 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 accounting principles generally accepted in the United States of
         America 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.

2.       Cash and Cash equivalents

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

3.       Merger Information

         On February 11, 2002, the Corporation entered into a definitive merger
         agreement to acquire Rowan Bancorp, Inc. ("Rowan Bancorp"), holding
         company for Rowan Savings Bank, SSB, Inc. ("Rowan Bank"), headquartered
         in China Grove, North Carolina. Under the terms of the agreement, Rowan
         Bancorp will be merged with a wholly-owned subsidiary of FNB Corp.
         formed for the purposes of effecting the merger, immediately after
         which, the subsidiary will be merged into FNB Corp. Rowan Bank will
         then become a separate subsidiary of FNB Corp. The merger will be
         accounted for as a purchase business combination and is subject to
         several conditions, including approval by the shareholders of Rowan
         Bancorp and approval by applicable regulatory authorities. Upon
         satisfaction of these conditions, the merger is anticipated to close
         early in the third quarter of 2002. Rowan Bancorp shareholders will be
         permitted to elect FNB Corp. common stock or cash, or a combination of
         each. Subject to the Corporation's ability to limit the overall stock
         consideration to 45%, each share of Rowan Bancorp common stock, at the
         election of the shareholder, will be converted into either 2.3715
         shares of FNB Corp. common stock or $36.00 in cash. At December 31,
         2001, Rowan Bancorp operated three offices through Rowan Bank and had
         approximately $116,033,000 in total assets, $96,494,000 in deposits and
         $10,043,000 in shareholders' equity.

                                       5

<PAGE>

4.       Adoption of SFAS No. 133

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

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

                  Total                    $59,361     $59,727       $   366
                                           =======     =======       =======

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

         On January 1, 2001, the Corporation had no embedded derivative
         instruments requiring separate accounting treatment. The Corporation
         does not engage in hedging activities and has identified fixed rate
         conforming loan commitments as its only freestanding derivative
         instruments. The fair value of these commitments was not material and
         therefore the adoption of SFAS No. 133 on January 1, 2001, did not have
         a material impact on the Corporation's consolidated financial
         statements. The fair value of these commitments at March 31, 2002 and
         2001 was not material to the Corporation's consolidated financial
         statements. The Coroporation had no other derivative instruments
         requiring separate accounting treatment at March 31, 2002 and 2001.

5.       Earnings Per Share (EPS)

         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

                                       6

<PAGE>

         for all periods presented. A reconciliation of the denominators of the
         basic and diluted EPS computations is as follows:

                                                         Three Months Ended
                                                               March 31,
                                                      ------------------------
                                                         2002         2001
                                                      ----------   -----------

         Basic EPS denominator - Weighted average
              number of common shares outstanding      4,761,448     5,062,591
         Dilutive share effect arising from assumed
              exercise of stock options                  108,141        78,802
                                                      ----------   -----------

         Diluted EPS denominator                       4,869,589     5,141,393
                                                      ==========   ===========

6.       Loans

         Loans as presented are reduced by net deferred loan fees of $443,000,
         $383,000 and $514,000 at March 31, 2002, March 31, 2001 and December
         31, 2001, respectively.

7.       Allowance for Loan Losses

         Changes in the allowance for loan losses were as follows:

                                                         Three Months Ended
                                                              March 31,
                                                      -------------------
                                                         2002       2001
                                                      --------    -------
                                                       (in thousands)

         Balance at beginning of period               $4,417      $4,352
         Charge-offs                                     383         121
         Recoveries                                       29          43
                                                      ------      ------
                  Net loan charge-offs                   354          78
         Provision for loan losses                       510         120
         Allowance adjustment for loans sold               -         (43)
                                                      ------      ------

         Balance at end of period                     $4,573      $4,351
                                                      ======      ======

8.       Supplementary Income Statement Information

         Significant components of other expense were as follows:

                                                         Three Months Ended
                                                             March 31,
                                                      ---------------------
                                                         2002       2001
                                                      --------    -------
                                                         (in thousands)

         Stationery, printing and supplies            $128          $137
         Advertising and marketing                     103            76

                                       7

<PAGE>

9.       Adoption of New Accounting Pronouncement

         In July 2001, the FASB issued Statement of Financial Accounting
         Standards No. 141, "Business Combinations" ("SFAS No. 141"), and
         Statement of Financial Accounting Standards No. 142, "Goodwill and
         Other Intangible Assets" ("SFAS No. 142"). SFAS No. 141 requires that
         the purchase method of accounting be used for all business combinations
         initiated after June 30, 2001. SFAS No. 141 also specifies criteria
         which must be met for intangible assets acquired in a purchase method
         business combination to be recognized and reported apart from goodwill.
         SFAS No. 142 requires that goodwill and intangible assets with
         indefinite useful lives no longer be amortized, but instead be tested
         for impairment at least annually in accordance with the provisions of
         SFAS No. 142. Also, SFAS No. 142 will require that identifiable
         intangible assets with definite useful lives be amortized over their
         respective estimated useful lives to their estimated residual values,
         and be reviewed for impairment in accordance with SFAS No. 121,
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to Be Disposed Of". The adoption of SFAS No. 141 and SFAS No.
         142 did not have a a material effect on the Corporation's consolidated
         financial statements other than providing enhanced disclosures for
         mortgage servicing rights. As of January 1, 2002, the Corporation had
         no goodwill and had intangible assets related to deposit and branch
         purchase acquisitions and mortgage servicing rights totaling $1,000 and
         $482,000, respectively.

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

         MSRs totaled $719,000 and $482,000 at March 31, 2002 and December 31,
         2001, respectively. Amortization expense totaled $32,000 and $5,000 for
         the three months ended March 31, 2002 and 2001, respectively.

         The estimated amortization expense for MSRs in future periods based on
         the unamortized balance at December 31, 2001 is as follows (in
         thousands):

         Years Ending December 31
         ------------------------

         2002                                             $  66
         2003                                                44
         2004                                                41
         2005                                                39
         2006                                                35
         2007 and later years                               257
                                                          -----

                  Total amortization expense              $ 482
                                                          =====

         The estimated amortization expense is based on current information
         regarding loan payments. The actual amortization expense in future
         periods is subject to change based on the volume of prepayments.

                                       8

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

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

Overview

         On February 11, 2002, the Corporation entered into a definitive merger
agreement to acquire Rowan Bancorp, Inc. ("Rowan Bancorp"), holding company for
Rowan Savings Bank, SSB, Inc. ("Rowan Bank"), headquartered in China Grove,
North Carolina. Under the terms of the agreement, Rowan Bancorp will be merged
with a wholly-owned subsidiary of FNB Corp. formed for the purposes of effecting
the merger, immediately after which, the subsidiary will be merged into FNB
Corp. Rowan Bank will then become a separate subsidiary of FNB Corp. The merger
will be accounted for as a purchase business combination and is subject to
several conditions, including approval by the shareholders of Rowan Bancorp and
approval by applicable regulatory authorities. Upon satisfaction of these
conditions, the merger is anticipated to close early in the third quarter of
2002. Rowan Bancorp shareholders will be permitted to elect FNB Corp. common
stock or cash, or a combination of each. Subject to the Corporation's ability to
limit the overall stock consideration to 45%, each share of Rowan Bancorp common
stock, at the election of the shareholder, will be converted into either 2.3715
shares of FNB Corp. common stock or $36.00 in cash. At December 31, 2001, Rowan
Bancorp operated three offices through Rowan Bank and had approximately
$116,033,000 in total assets, $96,494,000 in deposits and $10,043,000 in
shareholders' equity.

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

         The Corporation earned $1,805,000 in the first quarter of 2002, a 7.3%
increase over the same period in 2001. Reflecting the effect of a stock buyback
progam implemented in May 2001, earnings per share amounts increased by a higher
percentage than did net income in comparing first quarter periods. Basic
earnings per share increased from $.33 to $.38 and diluted earnings per share
increased from $.33 to $.37 for percentage increases of 15.2% and 12.1%,
respectively. Under the buyback program, the Corporation repurchased 320,841
shares of common stock in 2001 and 17,243 shares in the first quarter of 2002.

                                       9

<PAGE>

         Total assets were $598,001,000 at March 31, 2002, up 2.9% from March
31, 2001 and 0.7% from December 31, 2001. Loans, affected by the general
slowdown in the economy and by the high level of residential mortgage loan
refinancing activity, amounted to $380,606,000 at March 31, 2002, decreasing
2.0% from March 31, 2001 and 2.8% from December 31, 2001. Total deposits grew
3.0% from March 31, 2001 and 2.7% from December 31, 2001 to $493,229,000 at
March 31, 2002. Investment securities at March 31, 2002 were 10.6% higher
compared to March 31, 2001 and 3.0% higher compared to December 31, 2001.

Critical Accounting Policies

         The Corporation's significant accounting policies are set forth in Note
1 to the Consolidated Financial Statements contained in the Form 10-K Annual
Report for the fiscal year ended December 31, 2001. Of these significant
accounting policies, the Corporation considers its policy regarding the
allowance for loan losses to be its most critical accounting policy, because it
requires management's most subjective and complex judgments. In addition,
changes in economic conditions can have a significant impact on the allowance
for loan losses and therefore the provision for loan losses and results of
operations. The Corporation has developed appropriate policies and procedures
for assessing the adequacy of the allowance for loan losses, recognizing that
this process requires a number of assumptions and estimates with respect to its
loan portfolio. The Corporation's assessments may be impacted in future periods
by changes in economic conditions, the impact of regulatory examinations, and
the discovery of information with respect to borrowers which is not known to
management at the time of the issuance of the consolidated financial statements.
For additional discussion concerning the Corporation's allowance for loan losses
and related matters, see "Asset Quality".

Earnings Review

         The Corporation's net income increased $123,000 or 7.3% in the first
quarter of 2002 compared to the same period of 2001. Earnings were positively
impacted in the first quarter of 2002 by increases of $860,000 or 17.5% in net
interest income and $262,000 in noninterest income. These gains were
significantly offset, however, by increases of $586,000 in noninterest expense
and $390,000 in the provision for loan losses.

         On an annualized basis, return on average assets increased from 1.18%
in the first quarter of 2001 to 1.21% in the first quarter of 2002. Return on
average shareholders' equity increased from 11.89% to 12.68% in comparing the
same periods.

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 $5,768,000 in the first quarter of 2002
compared to $4,908,000 in the same period of 2001. This increase of $860,000 or
17.5% resulted primarily from an improvement in the net yield on earning assets,
or net interest margin, from 3.88% in the first quarter of 2001 to 4.43% in the
same period of 2002 coupled with a 4.0% increase in the level of average earning
assets. On a taxable equivalent basis, the increase in net interest income in
the first quarter of 2002 was $951,000, reflecting changes in the relative mix
of taxable and non-taxable earning assets in each period.

                                       10

<PAGE>

         Table 1 on page 20 sets forth for the periods indicated information
with respect to the Corporation's average balances of assets and liabilities, as
well as the total dollar amounts of interest income (taxable equivalent basis)
from earning assets and interest expense on interest-bearing liabilities,
resultant rates earned or paid, net interest income, net interest spread and net
yield on earning assets. Net interest spread refers to the difference between
the average yield on earning assets and the average rate paid on
interest-bearing liabilities. Net yield on earning assets, or net interest
margin, refers to net interest income divided by average earning assets and is
influenced by the level and relative mix of earning assets and interest-bearing
liabilities. Changes in net interest income on a taxable equivalent basis, as
measured by volume and rate variances, are also analyzed in Table 1. 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.

         Until the significant interest rate declines in 2001, there had been a
much greater degree of stability for several years in the interest rates both
earned and paid by the Bank. After rate cuts totaling 4.75%, the prime rate
averaged 6.99% in 2001 compared to the average prime rates of 9.21%, 7.99% and
8.37% in 2000, 1999 and 1998, respectively. Due to a general slowdown in the
economy that began to be perceived in the 2000 fourth quarter, the Federal
Reserve acted to provide a stimulus through a series of interest rate reductions
commencing in the 2001 first quarter, resulting in eight 50 basis point
reductions and three 25 basis point reductions in the prime rate that lowered it
to the 4.75% level at December 31, 2001. The reductions in the prime rate tended
to negatively impact the net interest margin and net interest spread until the
2001 third quarter when these measures began to improve.

         Following the rate cuts in 2001, the prime rate averaged 4.75% in the
first quarter of 2002 compared to 8.75% in the same period of 2001. The net
interest spread, in comparing first quarter periods, increased by 83 basis
points from 3.19% in 2001 to 4.02% in 2002, reflecting the effect of a decrease
in the average rate paid on interest-bearing liabilities, or cost of funds, that
more than offset the decrease in the average total yield on earning assets. The
yield on earning assets decreased by 125 basis points from 8.26% in 2001 to
7.01% in 2002, while the cost of funds decreased by 208 basis points from 5.07%
to 2.99%.

Provision for Loan Losses

         This provision is the charge against earnings to provide an allowance
or reserve for probable losses inherent in the loan portfolio. The amount of
each period's charge is affected by several considerations including
management's evaluation of various risk factors in determining the adequacy of
the allowance (see "Asset Quality"), actual loan loss experience and loan
portfolio growth. Earnings were negatively impacted in the first quarter of 2002
compared to the same period in 2001 by a $390,000 increase in the provision.

         The allowance for loan losses, as a percentage of loans held for
investment, amounted to 1.21% at March 31, 2002, 1.13% at March 31, 2001 and
1.17% at December 31, 2001. The increase in the allowance percentage from March
31, 2001 to March 31, 2002 related primarily to asset quality considerations,
increases in historical charge-off trends and general economic conditions.

                                       11

<PAGE>

Noninterest Income

         Noninterest income increased $262,000 or 18.4% in the first quarter of
2002 compared to the same period in 2001, reflecting in part the general
increase in the volume of business. The increase was primarily due to a $158,000
increase in the net gain on sales of loans and to a $91,000 increase in service
charges on deposit accounts. The net gain on sales of loans was affected in 2002
by the high level of residential mortgage loan refinancing activity. The
increase in service charges on deposit accounts was due to selected increases in
service charge rates that became effective in the 2002 first quarter and to an
increase in the level of deposit accounts subject to service charges.

Noninterest Expense

         Noninterest expense was $586,000 or 15.3% higher in the first quarter
of 2002 compared to the same period in 2001, due in large part to increased
personnel expense, which was impacted by increased staffing requirements, normal
salary adjustments and higher costs of fringe benefits. Other expense was
affected in 2002 by increases in advertising and marketing expense and expenses
related to nonperforming assets and by losses recorded on disposal of fixed
assets.

Income Taxes

         The effective income tax rate decreased from 29.2% in the first quarter
of 2001 to 28.4% in the same period of 2002 due principally to a decrease 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 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 $71,700,000
line of credit established at the Federal Home Loan Bank, less existing advances
against that line, and (e) the investment securities portfolio. 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.

                                       12

<PAGE>

Commitments, Contingencies and Off-Balance Sheet Risk

         In the normal course of business, various commitments are outstanding
that are not reflected in the consolidated financial statements. At March 31,
2002, a summary of significant commitments is as follows:

         Commitments to extend credit                     $107,039,000
         Standby letters of credit                             323,000

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

         Commitments to extend credit and undisbursed advances on customer lines
of credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since many commitments expire without being drawn, the total commitment amounts
do not necessarily represent future cash requirements. The Corporation evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary, upon extension of credit is based on
the credit evaluation of the borrower.

         Standby letters of credit are commitments issued by the Corporation to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that in
extending loans to customers.

         There were no binding commitments for the origination of mortgage loans
intended to be held for sale at March 31, 2002.

         The Corporation does not have any special purpose entities or other
similar forms of off-balance sheet financing.

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 March 31, 2002. A
liability-sensitive position means that in gap measurement periods of one year
or less there are more liabilities than assets subject to immediate repricing as
market rates change. Because immediately rate sensitive interest-bearing
liabilities exceed rate sensitive assets, the earnings position could improve in
a declining rate environment and could deteriorate in a rising rate environment,
depending on the correlation of rate changes in these two categories. Included
in interest-bearing liabilities subject to rate changes within 90 days is a
portion of the interest-bearing demand, savings and money market deposits. These
types of deposits historically have not repriced coincidentally with or in the
same proportion as general market indicators.

                                       13

<PAGE>

Capital Adequacy

         Under guidelines established by the Board of Governors of the Federal
Reserve System, capital adequacy is currently measured for regulatory purposes
by certain risk-based capital ratios, supplemented by a leverage capital ratio.
The risk-based capital ratios are determined by expressing allowable capital
amounts, defined in terms of Tier 1, Tier 2 and Tier 3, as a percentage of
risk-weighted assets, which are computed by measuring the relative credit risk
of both the asset categories on the balance sheet and various off-balance sheet
exposures. Tier 1 capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other disallowed
intangible assets. Tier 2 capital, which is limited to the total of Tier 1
capital, includes allowable amounts of subordinated debt, mandatory convertible
debt, preferred stock and the allowance for loan losses. Tier 3 capital,
applicable only to financial institutions subject to certain market risk capital
guidelines, is capital allocated to support the market risk related to a
financial institution's ongoing trading activities. At March 31, 2002, FNB Corp.
and the Bank were not subject to the market risk capital guidelines and,
accordingly, had no Tier 3 capital allocation. Total capital, for risk-based
purposes, consists of the sum of Tier 1, Tier 2 and Tier 3 capital. Under
current requirements, the minimum total capital ratio is 8.00% and the minimum
Tier 1 capital ratio is 4.00%. At March 31, 2002, FNB Corp. and the Bank had
total capital ratios of 14.41% and 13.75%, respectively, and Tier 1 capital
ratios of 13.31% and 12.65%.

         The leverage capital ratio, which serves as a minimum capital standard,
considers Tier 1 capital only and is expressed as a percentage of average total
assets for the most recent quarter, after reduction of those assets for goodwill
and other disallowed intangible assets at the measurement date. As currently
required, the minimum leverage capital ratio is 4.00%. At March 31, 2002, FNB
Corp. and the Bank had leverage capital ratios of 9.41% and 8.94%, respectively.

         The Bank is also required to comply with prompt corrective action
provisions established by the Federal Deposit Insurance Corporation Improvement
Act. To be categorized as well-capitalized, the Bank must have a minimum ratio
for total capital of 10.00%, for Tier 1 capital of 6.00% and for leverage
capital of 5.00%. As noted above, the Bank met all of those ratio requirements
at March 31, 2002 and, accordingly, is well-capitalized under the regulatory
framework for prompt corrective action.

Balance Sheet Review

         Total assets at March 31, 2002 were higher than at March 31, 2001 and
December 31, 2001 by $16,610,000 or 2.9% and $4,259,000 or 0.7%, respectively;
deposits were ahead by $14,590,000 or 3.0% and $12,999,000 or 2.7%. A portion of
the asset growth was funded by advances from the Federal Home Loan Bank which at
March 31, 2002 had increased by $5,000,000 or 20.0% compared to March 31, 2001
and were unchanged compared to December 31, 2001. The level of funds provided by
retail repurchase agreements at March 31, 2002 had increased by $1,112,000 or
8.8% from March 31, 2001 and had decreased by $1,115,000 or 7.5% from December
31, 2001. Average assets increased 4.2% in the first quarter of 2002 compared to
the same period in 2001, while average deposits increased 3.2%.

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. In general, since there was growth in total assets but a
decrease in loans during the twelve-month period ended March 31, 2002, the level
of

                                       14

<PAGE>

investment securities was increased $16,115,000 or 10.6%, with a net increase of
$4,885,000 or 3.0% occurring in the first quarter of 2002. Additionally, in
connection with certain balance sheet strategies, the funds obtained from
advances totaling $5,000,000 from the Federal Home Loan Bank in the fourth
quarter of 2001 were primarily utilized for the purchase of investment
securities. Investable funds not otherwise utilized are temporarily invested on
an overnight basis as federal funds sold, the level of which is affected by such
considerations as near-term loan demand and liquidity needs.

Loans

         The Corporation's primary source of revenue and largest component of
earning assets is the loan portfolio. Reflecting the general slowdown in the
economy and the high level of residential mortgage loan refinancing activity,
loans decreased $7,918,000 or 2.0% during the twelve-month period ended March
31, 2002, with a net loan decrease of $11,026,000 or 2.8% occurring in the first
quarter of 2002. Average loans were $10,144,000 or 2.6% lower in the first
quarter of 2002 than in the same period of 2001. The ratio of average loans to
average deposits, in comparing first quarter periods decreased from 83.4% in
2001 to 78.7% in 2002. The ratio of loans to deposits at March 31, 2002 was
77.2%.

         While the level of the entire loan portfolio has been adversely
affected by the general slowdown in the economy, the commercial and agricultural
loan portfolio experienced gains during both the twelve-month period ended March
31, 2002 and the first quarter of 2002. The balance of the 1-4 family
residential mortgage loan portfolio has been negatively affected by the high
level of refinancing activity, especially since certain loans previously
included in the "held for investment" category were sold when the refinancing
occurred.

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 a review of
individual loans, historical loan loss experience, the value and adequacy of
collateral, and economic conditions in the Bank's market area. For loans
determined to be impaired, the allowance is based on discounted cash flows using
the loan's initial effective interest rate or the fair value of the collateral
for certain collateral dependent loans. This evaluation is inherently subjective
as it requires material estimates, including the amounts and timing of future
cash flows expected to be received on impaired loans that may be susceptible to
significant change. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Bank's allowance for
loan losses. Such agencies may require the Bank to recognize changes to the
allowance based on their judgments about information available to them at the
time of their examination. Loans are charged off when, in the opinion of
management, they are deemed to be uncollectible. Recognized losses are charged
against the allowance, and subsequent recoveries are added to the allowance.

                                       15

<PAGE>

         At March 31, 2002, the Bank had impaired loans which totaled $852,000
and were also on nonaccrual status. The related allowance for loan losses on
these loans amounted to $450,000. At March 31, 2002, nonperforming loans were
$4,423,000 in total, nonaccrual loans and accruing loans past due 90 days or
more amounting to $4,121,000 and $302,000, respectively. At March 31, 2001,
nonperforming loans were $3,791,000 in total, nonaccrual loans and accruing
loans past due 90 days or more amounting to $3,280,000 and $511,000,
respectively.

         A model that considers both allocated and unallocated components of the
allowance for loan losses is used on a quarterly basis to analyze the adequacy
of the allowance to absorb probable losses inherent in the loan portfolio.
Homogeneous pools of loans are segregated, and classifications of individual
loans within certain of these pools are identified using risk grades derived
from regulatory guidelines. Allocations of estimated reserves are assigned to
the most adversely classified loans based upon an individual analysis of
present-value repayment and/or liquidation projections of each loan. The reserve
is allocated to each pool, and remaining classifications within pools, based
upon a two-year historical loss ratio, concentrations within industries,
economic and industry-specific trends, portfolio trends, and other subjective
factors. An additional portion of the reserve is unallocated to any specific
portion of the loan portfolio, and is based upon the mix and weight of the
several homogeneous pools. The determination within the allowance model of
allocated and unallocated components is not necessarily indicative of future
losses or allocations. The entire balance of the allowance for loan losses is
available to absorb losses in the loan portfolio.

         The allowance for loan losses, as a percentage of loans held for
investment, amounted to 1.21% at March 31, 2002, 1.13% at March 31, 2001 and
1.17% at December 31, 2001. The increase in the allowance percentage from March
31, 2001 to March 31, 2002 related primarily to asset quality considerations,
increases in historical charge-off trends and general economic conditions.

         Management believes the allowance for loan losses of $4,573,000 at
March 31, 2002 is adequate to cover probable losses in the loan portfolio;
however, assessing the adequacy of the allowance is a process that requires
considerable judgment. Management's judgments are based on numerous assumptions
about current events which it believes to be reasonable, but which may or may
not be valid. Thus there can be no asssurance that loan losses in future periods
will not exceed the current allowance or that future increases in the allowance
will not be required. No assurance can be given that management's ongoing
evaluation of the loan portfolio in light of changing economic conditions and
other relevant circumstances will not require significant future additions to
the allowance, thus adversely affecting the operating results of the
Corporation.

                                       16

<PAGE>

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

                                                   Three Months Ended
                                                         March 31,
                                                  ---------------------
                                                   2002           2001
                                                  ------         ------
                                                      (in thousands)

         Balance at beginning of period           $4,417         $4,352
         Charge-offs                                 383            121
         Recoveries                                   29             43
                                                  ------         ------
                  Net loan charge-offs               354             78
         Provision for loan losses                   510            120
         Allowance adjustment for loans sold           -            (43)
                                                  ------         ------

         Balance at end of period                 $4,573         $4,351
                                                  ======         ======

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. Money market deposits were the most significant factor
resulting in the gain in deposits, increasing $14,640,000 during the
twelve-month period ended March 31, 2002 and $8,330,000 during the first quarter
of 2002. Time deposits, reflecting the effect of promotions for premium-rate
certificates of deposit, decreased $15,570,000 during the twelve-month period
ended March 31, 2002 and $3,963,000 during the first quarter of 2002. Further,
the level of time deposits obtained from governmental units fluctuates,
amounting to $59,853,000, $44,473,000 and $53,573,000 at March 31, 2002, March
31, 2001 and December 31, 2001, respectively.

Business Development Matters

         As discussed in the "Overview" and in Note 3 to Consolidated Financial
Statements, on February 11, 2002, the Corporation entered into a definitive
merger agreement to acquire Rowan Bancorp, Inc. ("Rowan Bancorp"), holding
company for Rowan Savings Bank, SSB, Inc. ("Rowan Bank"), headquartered in China
Grove, North Carolina. Under the terms of the agreement, Rowan Bancorp will be
merged with a wholly-owned subsidiary of FNB Corp. formed for the purposes of
effecting the merger, immediately after which, the subsidiary will be merged
into FNB Corp. Rowan Bank will then become a separate subsidiary of FNB Corp.
The merger is anticipated to close early in the third quarter of 2002.

         As discussed in the "Overview", management adopted a balance sheet
restructuring project in the 2000 fourth quarter that has affected loans and
other balance sheet categories in both the 2000 fourth quarter and the 2001
first quarter.

                                       17

<PAGE>

         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 was completed in February 2002, resulting in a
total capital outlay of approximately $1,400,000. Prior to completion of the
permanent facility, a temporary mobile office, which opened in August 1999, was
operated at this site.

         In April 2002, the Bank received regulatory approval for establishment
of a new branch office in Pinehurst, North Carolina. The office will be located
in a leased facility which had previously been used as a banking office by
another financial institution. No significant capital outlay is expected.

Accounting Pronouncement Matters

         In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No.
143"), which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement cost. SFAS No. 143 requires the Corporation to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation associated with the retirement of tangible long-lived
assets that result from the acquisition, construction, development and/or normal
use of the assets. The Corporation also is to record a corresponding increase to
the carrying amount of the related long-lived asset and to depreciate that cost
over the life of the asset. The liability is changed at the end of each period
to reflect the passage of time and changes in the estimated future cash flows
underlying the initial fair value measurement. This statement is effective for
fiscal years beginning after June 15, 2002. At this time, the Corporation is
assessing the impact of SFAS No. 143 on its financial condition and results of
operations.

         In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS No. 144"), which addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. This standard provides guidance
on differentiating between long-lived assets to be held and used, long-lived
assets to be disposed of other than by sale and long-lived assets to be disposed
of by sale. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". Statement 144
also supersedes APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions". SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001. The Corporation
adopted the provisions of SFAS No. 144 effective January 1, 2002 with no effect
on its consolidated financial statements.

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

         The statements contained in this Quarterly Report on Form 10-Q that are
not historical facts are forward-looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995), which can be identified
by the use of forward-looking terminology such as "believes", "expects",
"plans", "projects", "goals", "estimates", "may", "could", "should", or
"anticipates" or the negative thereof or other variations thereon of comparable
terminology, or by discussions of strategy that involve risks and uncertainties.
In addition, from time to time, the Corporation or its representatives have made
or may make forward-looking statements, orally or in writing. Such
forward-looking statements may be included in, but are not limited to, various
filings made by the Corporation with the Securities and Exchange Commission, or
press releases or oral statements made by or with the approval of an authorized
executive officer of the

                                       18

<PAGE>

Corporation. Forward-looking statements are based on management's current views
and assumptions and involve risks and uncertainties that could significantly
affect expected results. The Corporation wishes to caution the reader that
factors, such as those listed below, in some cases have affected and could
affect the Corporation's actual results, causing actual results to differ
materially from those in any forward-looking statement. These factors include:
(i) competitive pressure in the banking industry or in the Corporation's markets
may increase significantly, (ii) changes in the interest rate environment may
reduce margins, (iii) general economic conditions, either nationally or
regionally, may be less favorable than expected, resulting in, among other
things, credit quality deterioration, (iv) changes may occur in banking
legislation and in the environment, (v) changes may occur in general business
conditions and inflation and (vi) changes may occur in the securities markets.
Readers should also consider information on risks and uncertainties contained in
the discussions of competition, regulation and supervision, and effect of
governmental policies contained in the Corporation's most recent Annual Report
on Form 10-K.

                                       19

<PAGE>

Table 1
Average Balances and Net Interest Income Analysis

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31                                  2002                                 2001
                                              ----------------------------------     ----------------------------------
                                                                        Average                                Average

                                                           Interest      Rates                    Interest      Rates
                                               Average     Income/      Earned/       Average     Income/      Earned/

                                               Balance     Expense       Paid         Balance     Expense       Paid
                                              ---------   ----------   ---------     ---------   ----------   ---------
                                                                                   (Taxable Equivalent Basis, Dollars in
                                                                                                 Thousands)
<S>                                           <C>         <C>               <C>      <C>         <C>               <C>
Earning Assets
Loans (2)(3)                                  $ 383,601   $   6,796         7.16%    $ 393,745   $   8,572         8.80%
Investment securities (2):
     Taxable income                             139,960       2,376         6.79       114,951       1,921         6.69
     Non-taxable income                          24,993         465         7.44        19,482         372         7.64
Other earning assets                              7,110          29         1.66         6,366          85         5.42
                                              ---------   ---------    ---------     ---------   ---------    ---------
        Total earning assets                    555,664       9,666         7.01       534,544      10,950         8.26
                                              ---------   ---------    ---------     ---------   ---------    ---------

Cash and due from banks                          11,859                                 12,615
Other assets, net                                27,061                                 23,482
                                              ---------                              ---------
        Total Assets                          $ 594,584                              $ 570,641
                                              =========                              =========

Interest-Bearing Liabilities
Interest-bearing deposits:
     Demand deposits                          $  59,942          97         0.66     $  54,698         146         1.08
     Savings deposits                            34,585          85         1.00        34,354         170         2.00
     Money market deposits                       50,205         243         1.96        38,118         402         4.28
     Certificates and other time deposits       291,044       2,683         3.74       300,038       4,618         6.24
Retail repurchase agreements                     13,617          62         1.83        11,142         124         4.53
Federal Home Loan Bank advances                  30,000         361         4.88        21,511         281         5.29
Federal funds purchased                             638           3         2.03         1,792          28         6.35
                                              ---------   ---------    ---------     ---------   ---------    ---------
        Total interest-bearing liabilities      480,031       3,534         2.99       461,653       5,769         5.07
                                              ---------   ---------    ---------     ---------   ---------    ---------

Noninterest-bearing demand deposits              51,600                                 45,089
Other liabilities                                 6,024                                  7,313
Shareholders' equity                             56,929                                 56,586
                                              ---------                              ---------
        Total Liabilities and
               Shareholders' Equity           $ 594,584                              $ 570,641
                                              =========                              =========

Net Interest Income and Spread                            $   6,132         4.02%                $   5,181         3.19%
                                                          =========    =========                 =========    =========

Net Yield on Earning Assets                                                 4.43%                                 3.88%
                                                                       =========                              =========

<CAPTION>


                                                      2002 Versus 2001
                                              ----------------------------------
                                                Interest Variance
                                                     due to (1)           Net
                                              ----------------------
                                                Volume       Rate       Change
                                              ----------  ----------  ----------

<S>                                           <C>         <C>            <C>
Earning Assets
Loans (2)(3)                                  $    (216)  $  (1,560)     (1,776)
Investment securities (2):
     Taxable income                                 426          29         455
     Non-taxable income                             103         (10)         93
Other earning assets                                  9         (65)        (56)
                                              ---------   ---------   ---------
        Total earning assets                        322      (1,606)     (1,284)
                                              ---------   ---------   ---------

Cash and due from banks
Other assets, net

        Total Assets


Interest-Bearing Liabilities
Interest-bearing deposits:
     Demand deposits                                 13         (62)        (49)
     Savings deposits                                 1         (86)        (85)
     Money market deposits                          104        (263)       (159)
     Certificates and other time deposits          (135)     (1,800)     (1,935)
Retail repurchase agreements                         24         (86)        (62)
Federal Home Loan Bank advances                     104         (24)         80
Federal funds purchased                             (12)        (13)        (25)
                                              ---------   ---------   ---------
        Total interest-bearing liabilities           99      (2,334)     (2,235)
                                              ---------   ---------   ---------

Noninterest-bearing demand deposits
Other liabilities
Shareholders' equity

        Total Liabilities and
               Shareholders' Equity


Net Interest Income and Spread                $     223   $     728   $     951
                                              =========   =========   =========

Net Yield on Earning Assets

</TABLE>

(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.

                                       20

<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, 2001.

                                       21

<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 23 and 24 of this report.

         (b)   Reports on Form 8-K.

               No reports on Form 8-K were filed during the quarter ended
               March 31, 2002.

                    ________________________________________


                                   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: May 14, 2002                     By: /s/ Jerry A. Little
                                           ---------------------------------
                                               Jerry A. Little
                                               Treasurer and Secretary
                                               (Principal Financial and
                                               Accounting Officer)

                                       22

<PAGE>

                                INDEX TO EXHIBITS

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

     2.10              Agreement and Plan of Merger dated as of February 11,
                       2002 by and between the Registrant and Rowan Bancorp,
                       Inc., incorporated herein by reference to Exhibit 2.10 to
                       the Registrant's Form 10-K Annual Report for the fiscal
                       year ended December 31, 2001.

     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.

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

                                       23

<PAGE>

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

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

     10.22*            Form of Nonqualified Stock Option Agreement between FNB
                       Corp. and certain of its directors, pursuant to the
                       Registrant's Stock Compensation Plan, incorporated herein
                       by reference to Exhibit 10.32 to the Registrant's Form
                       10-KSB Annual Report for the fiscal year ended December
                       31, 1994.

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

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

     10.32*            Employment Agreement dated as of April 10, 2000 between
                       First National Bank and Trust Company and R. Larry
                       Campbell, incorporated herein by reference to Exhibit
                       10.32 to the Registrant's Form 10-K Annual Report for the
                       fiscal year ended December 31, 2000.

     10.33*            Nonqualified Supplemental Retirement Plan with R. Larry
                       Campbell, incorporated herein by reference to Exhibit
                       10(c) to the Annual Report on Form 10-KSB of Carolina
                       Fincorp, Inc. for the fiscal year ended June 30, 1997.

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

* Management contract, or compensatory plan or arrangement.

                                       24