UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Mark One)

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

For the quarterly period ended March 31, 2009

o		Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from                      to                     

F.N.B. CORPORATION

(Exact name of registrant as specified in its charter)

Florida		25-1255406
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One F.N.B. Boulevard, Hermitage, PA		16148
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 724-981-6000

(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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at April 30, 2009
Common Stock, $0.01 Par Value		89,774,045 Shares

 

 

F.N.B. CORPORATION
FORM 10-Q/A
March 31, 2009

EXPLANATORY NOTE

1

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except par value

		March 31,				December 31,
		2009				2008
		(Unaudited)
Assets
Cash and due from banks		$	216,462			$	169,224
Interest bearing deposits with banks			3,118				2,979
Federal funds sold			50,000				—
Securities available for sale			536,744				482,270
Securities held to maturity (fair value of $798,176 and $851,251)			786,195				843,863
Residential mortgage loans held for sale			22,976				10,708
Loans, net of unearned income of $32,984 and $33,962			5,799,934				5,820,380
Allowance for loan losses			(103,127	)			(104,730	)
Net Loans			5,696,807				5,715,650
Premises and equipment, net			121,720				122,599
Goodwill			529,112				528,278
Core deposit and other intangible assets, net			44,414				46,229
Bank owned life insurance			217,298				217,737
Other assets			229,951				225,274
Total Assets		$	8,454,797			$	8,364,811
Liabilities
Deposits:
Non-interest bearing demand		$	922,476			$	919,539
Savings and NOW			2,926,734				2,816,628
Certificates and other time deposits			2,313,995				2,318,456
Total Deposits			6,163,205				6,054,623
Other liabilities			92,229				92,305
Short-term borrowings			522,323				596,263
Long-term debt			445,242				490,250
Junior subordinated debt owed to unconsolidated subsidiary trusts			205,217				205,386
Total Liabilities			7,428,216				7,438,827
Stockholders’ Equity
Preferred stock — no par value Authorized — 20,000,000 shares Issued — 100,000 shares			95,243				—
Common stock — $0.01 par value Authorized — 500,000,000 shares Issued — 89,868,212 and 89,726,592 shares			895				894
Additional paid-in capital			959,149				953,200
Retained earnings			2,390				(1,143	)
Accumulated other comprehensive income			(29,494	)			(26,505	)
Treasury stock — 94,167 and 26,440 shares at cost			(1,602	)			(462	)
Total Stockholders’ Equity			1,026,581				925,984
Total Liabilities and Stockholders’ Equity		$	8,454,797			$	8,364,811

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Dollars in thousands, except per share data
Unaudited

		Three Months Ended
		March 31,
		2009				2008
Interest Income
Loans, including fees		$	83,240			$	76,409
Securities:
Taxable			13,031				10,430
Nontaxable			1,769				1,606
Dividends			45				67
Other			17				13
Total Interest Income			98,102				88,525
Interest Expense
Deposits			24,239				27,592
Short-term borrowings			2,286				4,007
Long-term debt			4,848				5,222
Junior subordinated debt owed to unconsolidated subsidiary trusts			2,647				2,739
Total Interest Expense			34,020				39,560
Net Interest Income			64,082				48,965
Provision for loan losses			10,514				3,583
Net Interest Income After Provision for Loan Losses			53,568				45,382
Non-Interest Income
Service charges			13,599				10,186
Insurance commissions and fees			5,081				3,922
Securities commissions and fees			1,788				1,520
Trust fees			2,917				2,224
Gain on sale of securities			278				754
Impairment loss on equity securities			(203	)			(10	)
Gain on sale of residential mortgage loans			536				451
Bank owned life insurance			1,602				1,144
Other			2,581				1,977
Total Non-Interest Income			28,179				22,168
Non-Interest Expense
Salaries and employee benefits			32,102				25,256
Net occupancy			5,726				3,816
Equipment			4,365				3,115
Amortization of intangibles			1,815				1,073
Outside services			5,404				4,317
Other			11,560				6,786
Total Non-Interest Expense			60,972				44,363
Income Before Income Taxes			20,775				23,187
Income taxes			5,124				6,696
Net Income			15,651				16,491
Preferred stock dividends and discount amortization			1,343				—
Net Income Available to Common Shareholders		$	14,308			$	16,491
Net Income per Common Share
Basic		$	0.16			$	0.27
Diluted			0.16				0.27
Cash Dividends per Common Share			0.12				0.24

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Dollars in thousands
Unaudited

																						Accumulated
																						Other
		Compre-												Additional								Comprehensive
		hensive				Preferred				Common				Paid-In				Retained				Income				Treasury
		Income				Stock				Stock				Capital				Earnings				(Loss)				Stock				Total
Balance at January 1, 2009						$	—			$	894			$	953,200			$	(1,143	)		$	(26,505	)		$	(462	)		$	925,984
Net income		$	15,651																15,651												15,651
Change in other comprehensive (loss)			(2,989	)																			(2,989	)							(2,989	)
Comprehensive income		$	12,662
Common stock dividends ($0.12/share)																			(10,775	)											(10,775	)
Preferred stock dividends and amortization of discount							218												(1,343	)											(1,125	)
Issuance of preferred stock and common stock warrant							95,025								4,723																99,748
Issuance of common stock											1				832												(1,140	)			(307	)
Restricted stock compensation															552																552
Tax benefit of stock-based compensation															(158	)															(158	)
Balance at March 31, 2009						$	95,243			$	895			$	959,149			$	2,390			$	(29,494	)		$	(1,602	)		$	1,026,581
Balance at January 1, 2008							—			$	602			$	508,891			$	42,426			$	(6,738	)		$	(824	)		$	544,357
Net income		$	16,491																16,491												16,491
Change in other comprehensive (loss)			(2,269	)																			(2,269	)							(2,269	)
Comprehensive income		$	14,222
Common stock dividends ($0.24/share)																			(14,584	)											(14,584	)
Issuance of common stock											1				183												(470	)			(286	)
Restricted stock compensation															627																627
Tax benefit of stock-based compensation															(108	)															(108	)
Adjustment to initially apply EITF 06-04 and 06-10																			(606	)											(606	)
Balance at March 31, 2008							—			$	603			$	509,593			$	43,727			$	(9,007	)		$	(1,294	)		$	543,622

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
Unaudited

		Three Months Ended
		March 31,
		2009				2008
Operating Activities
Net income		$	15,651			$	16,491
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion			8,492				3,439
Provision for loan losses			10,514				3,583
Deferred taxes			(406	)			(360	)
Gain on sale of securities			(75	)			(744	)
Tax benefit of stock-based compensation			158				108
Net change in:
Interest receivable			1,429				522
Interest payable			(909	)			—
Residential mortgage loans held for sale			(12,268	)			(3,401	)
Bank owned life insurance			446				(1,190	)
Other, net			(513	)			(13	)
Net cash flows provided by operating activities			22,519				18,435
Investing Activities
Net change in:
Interest bearing deposits with banks			(176	)			(784	)
Federal funds sold			(50,000	)			—
Loans			2,221				(100,323	)
Securities available for sale:
Purchases			(141,808	)			(92,879	)
Sales			77				799
Maturities			82,487				60,255
Securities held to maturity:
Purchases			(2,265	)			—
Maturities			59,694				40,506
Purchase of bank owned life insurance			(8	)			—
Increase in premises and equipment			(2,886	)			(2,509	)
Acquisitions, net of cash acquired			(17	)			—
Net cash flows used in investing activities			(52,681	)			(94,935	)
Financing Activities
Net change in:
Non-interest bearing deposits, savings and NOW accounts			113,043				29,677
Time deposits			(4,461	)			9,293
Short-term borrowings			(73,939	)			15,767
Increase in long-term debt			7,402				57,110
Decrease in long-term debt			(52,410	)			(42,031	)
Decrease in junior subordinated debt			(169	)			—
Issuance of preferred stock and common stock warrant			99,748				—
Issuance of common stock			244				(342	)
Tax benefit of stock-based compensation			(158	)			(108	)
Cash dividends paid			(11,900	)			(14,584	)
Net cash flows provided by financing activities			77,400				54,782
Net Increase in Cash and Due from Banks			47,238				(21,718	)
Cash and due from banks at beginning of period			169,224				130,235
Cash and Due from Banks at End of Period		$	216,462			$	108,517

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2009

BUSINESS

          F.N.B. Corporation (the Corporation) is a diversified financial services company headquartered in Hermitage, Pennsylvania. Its primary businesses include community banking, consumer finance, wealth management and insurance. The Corporation also conducts leasing and merchant banking activities. The Corporation operates its community banking business through a full service branch network in Pennsylvania and Ohio and loan production offices in Pennsylvania, Florida and Tennessee. The Corporation operates its wealth management and insurance businesses within the existing branch network. It also conducts selected consumer finance business in Pennsylvania, Ohio and Tennessee.

BASIS OF PRESENTATION

          The Corporation’s accompanying consolidated financial statements and these notes to the financial statements include subsidiaries in which the Corporation has a controlling financial interest. Companies in which the Corporation controls operating and financing decisions (principally defined as owning a voting or economic interest greater than 50%) are also consolidated. Variable interest entities are consolidated if the Corporation is exposed to the majority of the variable interest entity’s expected losses and/or residual returns (i.e., the Corporation is considered to be the primary beneficiary). The Corporation owns and operates First National Bank of Pennsylvania (FNBPA), First National Trust Company, First National Investment Services Company, LLC, F.N.B. Investment Advisors, Inc., First National Insurance Agency, LLC, Regency Finance Company (Regency), F.N.B. Capital Corporation, LLC and Bank Capital Services, and results for each of these entities are included in the accompanying consolidated financial statements.

          The accompanying consolidated financial statements include all adjustments that are necessary, in the opinion of management, to fairly reflect the Corporation’s financial position and results of operations. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.

          Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The interim operating results are not necessarily indicative of operating results for the full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K filed with the SEC on March 2, 2009.

USE OF ESTIMATES

          The accounting and reporting policies of the Corporation conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Material estimates that are particularly susceptible to significant changes include the allowance for loan losses, securities valuations, goodwill and other intangible assets and income taxes.

PREFERRED STOCK AND STOCK WARRANT

          In connection with the United States Treasury Department’s (UST) Capital Purchase Program (CPP), on January 9, 2009, the Corporation voluntarily issued to the UST 100,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series C (Preferred Series C Stock) and a warrant to purchase up to 1,302,083 shares of the Corporation’s common stock, for an aggregate purchase price of $100.0 million.

          The Preferred Series C Stock and the warrant are classified in equity on the balance sheet. The Preferred Series C Stock has similar characteristics of an “increasing rate security” as described by Staff Accounting Bulletin (SAB) No. 68, Increasing Rate Preferred Stock. The proceeds received in conjunction with the issuance of the Preferred Series C Stock and the warrant were allocated to preferred stock based on their relative fair values. Discounts

on the Preferred Series C Stock are amortized over the expected life of five years, by charging the imputed dividend and issuance costs against retained earnings and increasing the carrying amount of preferred stock by a corresponding amount. In determining the fair value of the preferred shares, the Corporation determined that a market discount rate of 12% was reasonable.

          The warrant, which has a term of ten years and is immediately exercisable, in whole or in part, is carried in equity until exercised or expired based on the SEC and Financial Accounting Standards Board (FASB) view that they would not object to the classification of such a warrant as permanent equity. This view is consistent with the objective of the CPP that equity in these securities should be considered part of equity for regulatory reporting purposes. The fair value of the warrant used in allocating total proceeds received was determined based on a binomial option pricing model. The binomial model allowed for the use of a discrete dividend, varying interest rates and estimates of expected volatility that market participants would likely use in determining an exchange price.

MERGERS AND ACQUISITIONS

          On August 16, 2008, the Corporation completed its acquisition of Iron and Glass Bancorp, Inc. (IRGB), a bank holding company based in Pittsburgh, Pennsylvania. On the acquisition date, IRGB had $301.7 million in assets, which included $168.8 million in loans and $252.3 million in deposits. The transaction, valued at $83.7 million, resulted in the Corporation paying $36.7 million in cash and issuing 3,176,990 shares of its common stock in exchange for 1,125,026 shares of IRGB common stock. The assets and liabilities of IRGB were recorded on the Corporation’s balance sheet at their fair values as of August 16, 2008, the acquisition date, and IRGB’s results of operations have been included in the Corporation’s consolidated statement of income since then. IRGB’s banking subsidiary, Iron and Glass Bank, was merged into FNBPA on August 16, 2008. Based on the purchase price allocation, the Corporation recorded $47.7 million in goodwill and $3.6 million in core deposit intangibles as a result of the acquisition. None of the goodwill is deductible for income tax purposes.

          On April 1, 2008, the Corporation completed its acquisition of Omega Financial Corporation (Omega), a diversified financial services company based in State College, Pennsylvania. On the acquisition date, Omega had $1.8 billion in assets, which included $1.1 billion in loans and $1.3 billion in deposits. The all-stock transaction, valued at approximately $388.2 million, resulted in the Corporation issuing 25,362,525 shares of its common stock in exchange for 12,544,150 shares of Omega common stock. The assets and liabilities of Omega were recorded on the Corporation’s balance sheet at their fair values as of April 1, 2008, the acquisition date, and Omega’s results of operations have been included in the Corporation’s consolidated statement of income since then. Omega’s banking subsidiary, Omega Bank, was merged into FNBPA on April 1, 2008. Based on the purchase price allocation, the Corporation recorded $239.2 million in goodwill and $29.7 million in core deposit and other intangibles as a result of the acquisition. None of the goodwill is deductible for income tax purposes.

NEW ACCOUNTING STANDARDS

Determining Whether Impairment of a Debt Security is Other-Than-Temporary

          In January 2009, the FASB issued FASB Staff Position (FSP) Emerging Issues Task Force (EITF) 99-20-1, which amends EITF 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to align the impairment guidance in EITF 99-20 with that in FAS 115, Accounting for Certain Investments in Debt and Equity Securities, and related implementation guidance.

          Prior to the issuance of FSP EITF 99-20-1, GAAP had two different models for determining whether the impairment of a debt security is other-than-temporary. The differences are summarized as follows:

	a.		EITF 99-20 requires the use of market participant assumptions about future cash flows. This cannot be overcome by management judgment of the probability of collecting all cash flows previously projected.
	b.		FAS 115 does not require exclusive reliance on market participant assumptions about future cash flows. Rather, FAS 115 permits the use of reasonable management judgment of the probability that the holder will be unable to collect all amounts due.

          Eliminating the key distinctions between the two promotes a more consistent determination of whether other-than-temporary impairment (OTTI) has occurred. Specifically, FSP EITF 99-20-1 removes the requirement to use market participant assumptions when determining future cash flows and instead requires an assessment of whether it is probable that there has been an adverse change in estimated cash flows. The FSP retains and emphasizes the objective of OTTI assessment and the related disclosure requirements in FAS 115. The provisions of FSP EITF 99-20-1 are effective for interim and annual reporting periods ending after December 15, 2008, and are to be applied prospectively. Accordingly, the Corporation adopted the FSP beginning October 1, 2008 and considered this guidance in determining OTTI beginning December 31, 2008.

Pensions and Other Postretirement Benefits

          In December 2008, the FASB issued FSP Financial Accounting Standards Board Statement (FAS) 132(R)-1, Employers’ Disclosures about Pensions and Other Postretirement Benefits, to require more detailed disclosures about employers’ plan assets, including employers’ investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. Adoption of FAS 132(R)-1 will not have a material impact on the Corporation’s consolidated financial statements.

Disclosures about Derivative Instruments and Hedging Activities

          In March 2008, the FASB issued FAS 161, Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement No. 133, which amends and expands the disclosure requirements of FAS 133, Accounting for Derivative Instruments and Hedging Activities, with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. The Corporation adopted FAS 161 effective January 1, 2009. FAS 161 relates to disclosures only and its adoption did not have any effect on the financial condition, results of operations or liquidity of the Corporation.

Business Combinations

          In December 2007, the FASB issued FAS 141R, Business Combinations, which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. FAS 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. FAS 141R is effective for the Corporation for acquisitions made after January 1, 2009 and accordingly, was not used by the Corporation in recognizing and measuring the Omega and IRGB acquisitions.

Noncontrolling Interests in Consolidated Financial Statements

          In December 2007, the FASB issued FAS 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of Accounting Research Bulletin (ARB) No. 51. FAS 160 establishes accounting and reporting standards for ownership interest in a subsidiary and for the deconsolidation of a subsidiary. The Corporation adopted FAS 160 effective January 1, 2009. The adoption of the standard did not have a material effect on the financial condition, results of operations or liquidity of the Corporation.

Fair Value Measurements

          In September 2006, the FASB issued FAS 157, Fair Value Measurements, which replaces the different definitions of fair value in existing accounting literature with a single definition, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. The statement clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The Corporation adopted the provisions of FAS 157 on January 1, 2008. For additional information regarding FAS 157, see the Fair Value Measurements footnote included in this Report.

          In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active, which clarifies the application of FAS 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. The FSP states that an entity should not automatically conclude that a particular transaction price is determinative of fair value. In a dislocated market, judgment is required to evaluate whether individual transactions are forced liquidations or distressed sales. When relevant observable market information is not available, a valuation approach that incorporates management’s judgments about the assumptions that market participants would use in pricing the asset in a current sale transaction would be acceptable. The FSP also indicates that quotes from brokers or pricing services may be relevant inputs when measuring fair value, but are not necessarily determinative in the absence of an active market for the asset. In weighing a broker quote as an input to a fair value measurement, an entity should place less reliance on quotes that do not reflect the result of market transactions. Further, the nature of the quote (for example, whether the quote is an indicative price or a binding offer) should be considered when weighing the available evidence. The Corporation considered this guidance in determining fair value measurements at March 31, 2009.

          In April 2009, the FASB issued FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which amends FAS 157 to provide additional guidance on estimating fair value when the volume and level of activity for an asset or liability have significantly decreased and on identifying circumstances that indicate a transaction is not orderly. This statement clarifies that there may be increased instances of transactions that are not orderly in situations where there has been a significant reduction in volume and activity in relation to normal market activity. FSP 157-4 provides additional guidance on when multiple valuation techniques may be warranted and considerations for determining the weight that should be applied to the various techniques. FSP 157-4 is effective for interim and annual periods ending after June 15, 2009. The Corporation has not yet determined the impact that the adoption of FSP 157-4 will have on its consolidated financial statements.

          In April 2009, the FASB issued FSP 107-1, Interim Disclosures about Fair Value of Financial Instruments, which extends disclosure requirements of FAS 107, Disclosures About Fair Value of Financial Instruments, to interim financial statements. With certain exceptions, FAS 107 requires disclosures of the fair value of all financial instruments (recognized or unrecognized), when practicable to do so, and specifies the manner of disclosure. FSP 107-1 is effective for interim and annual periods ending after June 15, 2009. The Corporation has not yet determined the impact that the adoption of FSP 107-1 will have on its consolidated financial statements.

          In April 2009, the FASB issued FSP 115-2, Recognition and Presentation of Other-Than-Temporary Impairments, which amends the OTTI guidance for debt securities. The FSP makes changes to existing requirements as follows:

	a.		Under existing rules, to avoid recognizing OTTI an investor must assert that it has both the intent and the ability to hold a security for a period of time sufficient to allow for an anticipated recovery in its fair value to its amortized cost basis. These requirements are replaced with a requirement that an investor conclude that it does not intend to sell an impaired security and it is not more likely than not it will be required to sell the security before the recovery of its amortized cost basis.
	b.		The terminology used to assess the collectibility of cash flows is modified from “probable that the investor will be unable to collect all amounts due” to “the investor does not expect to recover the entire amortized cost basis of the security.” This change lowers the threshold for recognizing an OTTI from “probable” to “more likely than not.”
	c.		This FSP requires that OTTI be separated into the amount of impairment related to credit loss and the amount of impairment related to all other factors. The amount of impairment related to credit loss is to be recognized in earnings and the amount of impairment related to all other factors is to be recognized in other comprehensive income when an investor concludes it will not recover the entire cost basis of an impaired security and the investor does not intend to sell the security and has concluded it is not more likely than not it will be required to sell the security before recovery of its amortized cost basis. If these conditions are not met, the entire OTTI amount is recognized in earnings and need not be separately measured.

	d.		This FSP requires that the portion of an OTTI not related to a credit loss for a held-to-maturity security be recognized in a new category of other comprehensive income and be amortized over the remaining life of the debt security as an increase in the carrying value of the security.
	e.		The existing disclosures about OTTI for debt and equity securities are expanded, and extended to interim periods. Also required are new disclosures of the significant inputs used in determining a credit loss, as well as a rollforward of that amount each period.

          FSP 115-2 is effective for interim and annual periods ending after June 15, 2009. The Corporation has not yet determined the impact that the adoption of FSP 115-2 will have on its consolidated financial statements.

SECURITIES

          Following is a summary of the fair value of securities available for sale (in thousands):

		March 31,				December 31,
		2009				2008
U.S. Treasury and other U.S. government agencies and corporations		$	217,636			$	253,295
Mortgage-backed securities			227,246				133,056
States of the U.S. and political subdivisions			70,938				69,181
Corporate debt securities			17,920				23,240
Total debt securities			533,740				478,772
Equity securities			3,004				3,498
		$	536,744			$	482,270

          Following is a summary of the amortized cost of securities held to maturity (in thousands):

		March 31,				December 31,
		2009				2007
U.S. Treasury and other U.S. government agencies and corporations		$	506			$	506
Mortgage-backed securities			675,144				721,682
States of the U.S. and political subdivisions			104,649				115,766
Corporate and other debt securities			5,896				5,909
		$	786,195			$	843,863

          The Corporation recognized a gain of $0.2 million for the three months ended March 31, 2009 relating to the acquisition of a company in which the Corporation owned bank stock. Also, the Corporation sold $0.1 million of equity securities at a gain of $0.1 million for the three months ended March 31, 2009 and sold $0.1 million of equity securities at a gain of less than $0.1 million during the first three months of 2008. Additionally, the Corporation recognized a gain of $0.7 million relating to the VISA, Inc. initial public offering during the first three months of 2008. None of the security sales were at a loss.

          Following are summaries of the fair values and unrealized losses of securities, segregated by length of impairment (in thousands):

Securities available for sale:

		Less than 12 Months								Greater than 12 Months								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
March 31, 2009
Mortgage-backed securities		$	86,003			$	(1,045	)		$	—			$	—			$	86,003			$	(1,045	)
States of the U.S. and political subdivisions			40,202				(864	)			—				—				40,202				(864	)
Corporate debt securities			6,759				(3,271	)			10,631				(13,054	)			17,390				(16,325	)
Equity securities			2,183				(616	)			78				(33	)			2,261				(649	)
		$	135,147			$	(5,796	)		$	10,709			$	(13,087	)		$	145,856			$	(18,883	)
December 31, 2008
Mortgage-backed securities		$	33,856			$	(306	)		$	—			$	—			$	33,856			$	(306	)
States of the U.S. and political subdivisions			54,230				(2,138	)			—				—				54,230				(2,138	)
Corporate debt securities			4,797				(1,375	)			7,859				(9,604	)			12,656				(10,979	)
Equity securities			1,053				(258	)			32				(10	)			1,085				(268	)
		$	93,936			$	(4,077	)		$	7,891			$	(9,614	)		$	101,827			$	(13,691	)

     Securities held to maturity:

		Less than 12 Months								Greater than 12 Months								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
March 31, 2009
Mortgage-backed securities		$	17,894			$	(250	)		$	47,675			$	(9,593	)		$	65,569			$	(9,843	)
States of the U.S. and political subdivisions			18,308				(390	)			—				—				18,308				(390	)
Corporate debt securities			252				(6	)			3,828				(1,284	)			4,080				(1,290	)
		$	36,454			$	(646	)		$	51,503			$	(10,877	)		$	87,957			$	(11,523	)
December 31, 2008
Mortgage-backed securities		$	96,213			$	(6,531	)		$	7,832			$	(911	)		$	104,045			$	(7,442	)
States of the U.S. and political subdivisions			44,555				(928	)			—				—				44,555				(928	)
Corporate debt securities			277				(7	)			4,445				(680	)			4,722				(687	)
		$	141,045			$	(7,466	)		$	12,277			$	(1,591	)		$	153,322			$	(9,057	)

          As of March 31, 2009, securities with unrealized losses for less than 12 months include 13 investments in mortgage-backed securities, 63 investments in states of the U.S. and political subdivision securities, 11 investments in corporate and other debt securities and 19 investments in equity securities. Securities with unrealized losses of greater than 12 months include 11 investments in mortgage-backed securities, 14 investments in corporate and other debt securities and 1 investment in an equity security. The Corporation has concluded that it has both the intent and the ability to hold these securities for the time necessary to recover the amortized cost or until maturity.

          The Corporation’s unrealized losses on corporate debt securities primarily relate to investments in trust preferred securities. The Corporation’s portfolio of trust preferred securities consists of single-issuer and pooled securities. The single-issuer securities are primarily from money-center and large regional banks. The pooled securities consist of securities issued primarily by banks, with some of the pools including a limited number of insurance companies. Investments in pooled securities are all in mezzanine tranches except for one investment in a senior tranche, and are secured by over-collateralization or default protection provided by subordinated tranches. Unrealized losses on investments in trust preferred securities are attributable to temporary illiquidity and the uncertainty affecting these markets, as well as changes in interest rates.

Other-Than-Temporary Impairment

          The investment securities portfolio is evaluated for OTTI on a quarterly basis. Impairment is assessed at the individual security level. An investment security is considered impaired if the fair value of the security is less than its cost or amortized cost basis. When a decline in value is considered to be other-than-temporary, the security is written down to its fair value and an impairment loss is recorded as a loss within non-interest income in the consolidated statement of income.

          The Corporation’s OTTI evaluation process is performed in a consistent and systematic manner and includes an evaluation of all available evidence. Documentation of the process is extensive as necessary to support a conclusion as to whether a decline in fair value below cost or amortized cost is other-than-temporary and includes documentation supporting both observable and unobservable inputs and a rationale for conclusions reached. In making these determinations for pooled trust preferred securities, the Corporation consults with a third-party advisory firm to provide additional valuation assistance.

          This process considers factors such as the severity, length of time and anticipated recovery period of the impairment, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the issuer’s financial condition, capital strength and near-term prospects. The Corporation also considers its intent and ability to retain the security for a period of time sufficient to allow for a recovery in fair value, or until maturity. Among the factors that are considered in determining the Corporation’s intent and ability to retain the security is a review of its capital adequacy, interest rate risk position and liquidity.

          The assessment of a security’s ability to recover any decline in fair value, the ability of the issuer to meet contractual obligations, and the Corporation’s intent and ability to retain the security require considerable judgment.

          Debt securities with credit ratings below AA at the time of purchase that are repayment-sensitive securities are evaluated using the guidance of FAS 115 and the related guidance of EITF 99-20, as amended by FSP EITF 99-20-1. All other securities are required to be evaluated under FAS 115 and related implementation guidance.

          The Corporation recognized losses of $0.2 million and less than $0.1 million during the three months ended March 31, 2009 and 2008, respectively, due to the write-down to fair value of securities that were deemed to be other-than-temporarily impaired. The impairment losses for 2009 consisted of $0.1 million related to bank stocks and $0.1 million related to investments in a single-issuer trust preferred security.

          The $0.1 million OTTI charge for bank stocks relates to securities that have been in an unrealized loss position greater than 20% of book value for more than six months or the percentage of unrealized loss is such that management believes it will be unlikely to recover prior to the six-month time period. In accordance with GAAP, management has deemed these impairments to be other-than-temporary given the low likelihood that they will recover in value in the foreseeable future. At March 31, 2009, the Corporation held 30 bank stocks with an adjusted cost basis of $3.6 million and a fair value of $3.0 million.

          The Corporation invests in trust preferred securities issued by special purpose vehicles (SPV) which hold pools of collateral consisting of trust preferred and subordinated debt securities issued by banks, bank holding companies and insurance companies. The securities issued by the SPV are generally segregated into several classes known as tranches. Typically, the structure includes senior, mezzanine, and equity tranches. The equity tranche represents the first loss position. The Corporation generally holds interests in the senior and mezzanine tranches. Interest and principal collected from the collateral held by the SPV are distributed with a priority that provides the highest level of protection to the senior-most tranches. In order to provide a high level of protection to the senior tranches, cash flows are diverted to higher-level tranches if certain tests are not met.

          The Corporation prices its holdings of trust preferred securities using Level 3 inputs in accordance with FAS 157 and guidance issued by the SEC and FASB. In this regard, the Corporation evaluates current available information in estimating the future cash flows of these securities and determines whether there have been favorable or adverse changes in estimated cash flows from the cash flows previously projected. The Corporation considers the structure and term of the pool and the financial condition of the underlying issuers. Specifically, the evaluation incorporates factors such as over-collateralization and interest coverage tests, interest rates and appropriate risk premiums, the timing and amount of interest and principal payments and the allocation of payments to the various tranches. Current estimates of cash flows are based on the most recent trustee reports, announcements of deferrals or defaults, and assumptions

regarding expected future default rates, prepayment and recovery rates and other relevant information. In constructing these assumptions, the Corporation considers the following:

	•		that current defaults would have minimal, if any, recovery,
	•		that current deferrals would default and exhibit minimal recovery,
	•		recent historical performance metrics, including profitability, capital ratios, loan charge-offs and loan reserve ratios, for the underlying institutions that would indicate a higher probability of default by the institution,
	•		that institutions identified as possessing a higher probability of default would default immediately with a 15% recovery rate,
	•		that financial performance of the financial sector continues to be affected by the economic environment resulting in an expectation of additional deferrals and defaults in the future,
	•		whether the security is currently deferring interest, and
	•		the external rating of the security and recent changes to its external rating.

          The primary evidence utilized by the Corporation is the level of current deferrals and defaults, the level of excess subordination that allows for receipt of full principal and interest, the credit rating for each security and the likelihood that future deferrals and defaults will occur at a level that will fully erode the excess subordination based on an assessment of the underlying collateral. The Corporation combines the results of these factors considered in estimating the future cash flows of these securities to determine whether there has been an adverse change in estimated cash flows from the cash flows previously projected.

          The Corporation’s portfolio of trust preferred collateralized debt obligations consists of 13 pooled issues and eight single issue securities. One of the pooled issues is a senior tranche; the remaining 12 are mezzanine tranches. At March 31, 2009, the 13 pooled trust preferred securities had an estimated fair value of $13.5 million while the single issue trust preferred security had an estimated fair value of $8.2 million. The Corporation has concluded from the analysis performed at March 31, 2009 that it is probable that the Corporation will collect all contractual principal and interest payments on all of its single and pooled trust preferred securities, except for those on which OTTI was recognized.

          In 2008, the Corporation concluded that it was probable that there had been an adverse change in estimated cash flows for eight of the 13 pooled trust preferred security investments. Accordingly, the Corporation recognized OTTI on these securities of $15.9 million at December 31, 2008. At March 31, 2009, these securities are classified as non-performing investments.

          Trust preferred securities continue to experience price declines due to uncertainties surrounding these securities in the current market environment and the currently limited secondary market for such securities, in addition to issue-specific credit deterioration. Conclusions regarding OTTI for trust preferred securities are based on trends in new deferrals by the underlying issuer and the expectation for additional deferrals and defaults in the future, negative changes in credit ratings and expectation for potential future negative rating changes, whether the security is currently deferring interest on the tranche that the Corporation owns and expected continued weakness in the U.S. economy. Write-downs were based on the individual securities’ credit performance, its ability to make its contractual principal and interest payments and illiquidity in the markets for these securities. Should credit quality and market conditions continue to deteriorate, it is possible that additional write-downs may be required. If economic conditions worsen, it is possible that the securities that are currently performing satisfactorily could suffer impairment and could potentially require write-downs. The Corporation monitors actual deferrals and defaults as well as expected future deferrals and defaults to determine if there is a high probability for expected losses and contractual shortfalls of interest or principal, which could warrant further impairment. The entire portfolio is evaluated each quarter to determine if additional write-downs are warranted.

FEDERAL HOME LOAN BANK STOCK

          The Corporation is a member of the Federal Home Loan Bank (FHLB) of Pittsburgh. The FHLB requires members to purchase and hold a specified minimum level of FHLB stock based upon their level of borrowings, collateral balances and participation in other programs offered by the FHLB. Stock in the FHLB is non-marketable and is redeemable at the discretion of the FHLB. Both cash and stock dividends are reported as income.

          Members do not purchase stock in the FHLB for the same reasons that traditional equity investors acquire stock in an investor-owned enterprise. Rather, members purchase stock to obtain access to the low-cost products and services offered by the FHLB. Unlike equity securities of traditional for-profit enterprises, the stock of FHLB does not provide its holders with an opportunity for capital appreciation because, by regulation, FHLB stock can only be purchased, redeemed and transferred at par value.

          At both March 31, 2009 and December 31, 2008, the Corporation’s FHLB stock totaled $28.0 million and is included in other assets on the balance sheet. The Corporation accounts for the stock based on the industry guidance in the American Institute of Certified Public Accountants’ Statement of Position (SOP) 01-6, Accounting by Certain Entities (Including Entities with Trade Receivables) That Lend to or Finance the Activities of Others, which requires the investment to be carried at cost and evaluated for impairment based on the ultimate recoverability of the par value.

          The Corporation periodically evaluates its FHLB investment for possible impairment based on, among other things, the capital adequacy of the FHLB and its overall financial condition. The Federal Housing Finance Agency, the regulator of the FHLB, requires it to maintain a total capital-to-assets ratio of at least 4.0%. At December 31, 2008, the FHLB’s capital ratio of 4.6% exceeded the regulatory requirement. Failure by the FHLB to meet this regulatory capital requirement would require an in-depth analysis of other factors including:

	•		the member’s ability to access liquidity from the FHLB;
	•		the member’s funding cost advantage with the FHLB compared to alternative sources of funds;
	•		a decline in the market value of FHLB’s net assets relative to book value which may or may not affect future financial performance or cash flow;
	•		the FHLB’s ability to obtain credit and source liquidity, for which one indicator is the credit rating of the FHLB;
	•		the FHLB’s commitment to make payments taking into account its ability to meet statutory and regulatory payment obligations and the level of such payments in relation to the FHLB’s operating performance; and
	•		the prospects of amendments to laws that affect the rights and obligations of the FHLB.

          The Corporation believes its holdings in the stock are ultimately recoverable at par value at March 31, 2009 and, therefore, determined that FHLB stock was not other-than-temporarily impaired. In addition, the Corporation has ample liquidity and does not require redemption of its FHLB stock in the foreseeable future.

BORROWINGS

          Following is a summary of short-term borrowings (in thousands):

		March 31,				December 31,
		2009				2008
Securities sold under repurchase agreements		$	420,726			$	414,705
Subordinated notes			101,387				86,000
Federal funds purchased			—				95,032
Other short-term borrowings			210				526
		$	522,323			$	596,263

          Following is a summary of long-term debt (in thousands):

		March 31,				December 31,
		2009				2008
Federal Home Loan Bank advances		$	385,784			$	431,398
Subordinated notes			58,845				58,028
Convertible debt			613				613
Other long-term debt			—				211
		$	445,242			$	490,250

          The Corporation’s banking affiliate has available credit with the FHLB of $1.9 billion, of which $385.8 million was used as of March 31, 2009. These advances are secured by loans collateralized by 1-4 family mortgages and FHLB stock and are scheduled to mature in various amounts periodically through the year 2019. Effective interest rates paid on these advances range from 2.12% to 5.54% for both the three months ended March 31, 2009 and for the year ended December 31, 2008.

JUNIOR SUBORDINATED DEBT OWED TO UNCONSOLIDATED SUBSIDIARY TRUSTS

          The Corporation has four unconsolidated subsidiary trusts (collectively, the Trusts): F.N.B. Statutory Trust I, F.N.B. Statutory Trust II, Omega Financial Capital Trust I and Sun Bancorp Statutory Trust I. One hundred percent of the common equity of each Trust is owned by the Corporation. The Trusts are not consolidated because the Corporation is not the primary beneficiary, as evaluated under FAS Interpretation (FIN) 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. The Trusts were formed for the purpose of issuing Corporation-obligated mandatorily redeemable capital securities (trust preferred securities) to third-party investors. The proceeds from the sale of trust preferred securities and the issuance of common equity by the Trusts were invested in junior subordinated debt securities (subordinated debt) issued by the Corporation, which are the sole assets of each Trust. The Trusts pay dividends on the trust preferred securities at the same rate as the distributions paid by the Corporation on the junior subordinated debt held by the Trusts. Omega Financial Capital Trust I and Sun Bancorp Statutory Trust I were acquired as a result of the Omega acquisition.

          Distributions on the subordinated debt issued to the Trusts are recorded as interest expense by the Corporation. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the subordinated debt. The subordinated debt, net of the Corporation’s investment in the Trusts, qualifies as Tier 1 capital under the Board of Governors of the Federal Reserve System (FRB) guidelines subject to certain limitations beginning March 31, 2011. The Corporation has entered into agreements which, when taken collectively, fully and unconditionally guarantee the obligations under the trust preferred securities subject to the terms of each of the guarantees.

          The following table provides information relating to the Trusts as of March 31, 2009 (dollars in thousands):

		F.N.B.				F.N.B.								Sun Bancorp
		Statutory				Statutory				Omega Financial				Statutory
		Trust I				Trust II				Capital Trust I				Trust I
Trust preferred securities		$	125,000			$	21,500			$	36,000			$	16,500
Common securities			3,866				665				1,114				511
Junior subordinated debt			128,866				22,165				35,781				18,405
Stated maturity date			3/31/33				6/15/36				10/18/34				2/22/31
Optional redemption date			3/31/08				6/15/11				10/18/09				2/22/11
Interest rate			4.71	%			7.17	%			5.98	%			10.20	%
		variable; LIBOR plus 325 basis points				fixed until 6/15/11; then LIBOR plus 165 basis points				fixed until 10/09; then LIBOR plus 219 basis points

DERIVATIVE INSTRUMENTS

          The Corporation periodically enters into interest rate swap agreements to meet the financing, interest rate and equity risk management needs of its commercial loan customers. These agreements provide the customer the ability to convert from variable to fixed interest rates. The Corporation then enters into positions with a derivative counterparty in order to offset its exposure on the variable and fixed components of the customer agreement. These agreements qualify as derivatives, but are not designated as hedging instruments under FAS 133. These instruments and their offsetting positions are reported at fair value in other assets and other liabilities on the consolidated balance sheets with any resulting gain or loss recorded in current period earnings as other income.

          At March 31, 2009, the Corporation was party to sixty swaps with notional amounts totaling approximately $250.6 million with customers, and sixty swaps with notional amounts totaling approximately $250.6 million with derivative counterparties. The asset and liability associated with these interest rate swaps were $19.2 million and $18.6 million, respectively. During the quarter ended March 31, 2009, the Corporation recognized a net loss of $42,000 related to changes in fair value.

          Interest rate swap agreements generally require posting of collateral by either party under certain conditions. At March 31, 2009, the Corporation has posted collateral with derivative counterparties with a fair value of $5.3 million. Additionally, if the Corporation breaches its agreements with its derivative counterparties it would be required to settle its obligations under the agreements at the termination value and would be required to pay any additional amounts due in excess of amounts previously posted as collateral with the counterparty.

          The Corporation has entered into interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans to secondary market investors. These arrangements are considered derivative instruments. The fair values of the Corporation’s rate lock commitments to customers and commitments with investors at March 31, 2009 were not material.

COMMITMENTS, CREDIT RISK AND CONTINGENCIES

          The Corporation has commitments to extend credit and standby letters of credit that involve certain elements of credit risk in excess of the amount stated in the consolidated balance sheet. The Corporation’s exposure to credit loss in the event of non-performance by the customer is represented by the contractual amount of those instruments. The credit risk associated with loan commitments and standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal credit policies. Since many of these commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements.

          Following is a summary of off-balance sheet credit risk information (in thousands):

		March 31,				December 31,
		2009				2008
Commitments to extend credit		$	1,239,728			$	1,254,470
Standby letters of credit			84,336				97,016

          At March 31, 2009, funding of approximately 84.0% of the commitments to extend credit was dependent on the financial condition of the customer. The Corporation has the ability to withdraw such commitments at its discretion. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Based on management’s credit evaluation of the customer, collateral may be deemed necessary. Collateral requirements vary and may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

          Standby letters of credit are conditional commitments issued by the Corporation that may require payment at a future date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The obligations are not recorded in the Corporation’s consolidated financial statements. The Corporation’s exposure to credit loss in the event the customer does not satisfy the terms of the agreement equals the notional amount of the obligation less the value of any collateral.

          The Corporation and its subsidiaries are involved in various pending and threatened legal proceedings in which claims for monetary damages and other relief are asserted. These actions include claims brought against the Corporation and its subsidiaries where the Corporation or a subsidiary acted as one or more of the following: a depository bank, lender, underwriter, fiduciary, financial advisor, broker or was engaged in other business activities. Although the ultimate outcome for any asserted claim cannot be predicted with certainty, the Corporation believes that it and its subsidiaries have valid defenses for all asserted claims. Reserves are established for legal claims when losses associated with the claims are judged to be probable and the amount of the loss can be reasonably estimated.

          Based on information currently available, advice of counsel, available insurance coverage and established reserves, the Corporation does not anticipate, at the present time, that the aggregate liability, if any, arising out of such legal proceedings will have a material adverse effect on the Corporation’s consolidated financial position. However, the Corporation cannot determine whether or not any claims asserted against it will have a material adverse effect on its consolidated results of operations in any future reporting period.

          The Corporation bases its provision for income taxes upon income before income taxes, adjusted for the effect of certain tax-exempt income and non-deductible expenses. In addition, the Corporation reports certain items of income and expense in different periods for financial reporting and tax return purposes. The Corporation recognizes the tax effects of these temporary differences currently in the deferred income tax provision or benefit. The Corporation computes deferred tax assets or liabilities based upon the differences between the financial statement and income tax bases of assets and liabilities using the applicable marginal tax rate.

          The Corporation must evaluate the probability that it will ultimately realize the full value of its deferred tax assets. Realization of the Corporation's deferred tax assets is dependent upon a number of factors including the existence of any cumulative losses in prior periods, the amount of taxes paid in available carry-back periods, expectations for future earnings, applicable tax planning strategies, and assessment of current and future economic and business conditions. The Corporation establishes a valuation allowance when it is "more likely than not" that the Corporation will not be able to realize a benefit from its deferred tax assets, or when future deductibility is uncertain.

          At March 31, 2009, the Corporation anticipates that it will not utilize state net operating loss carryforwards and other net deferred tax assets at certain of its subsidiaries and has recorded a valuation allowance against the deferred tax assets. The Corporation believes that, except for the portion which is covered by the valuation allowance, it is more likely than not to realize the benefits of its deferred tax assets, net of the valuation allowance, at March 31, 2009 based on the level of historical taxable income and taxes paid in available carry-back periods.

EARNINGS PER COMMON SHARE

          Earnings per common share is computed using net income available to common shareholders, which is net income adjusted for the preferred stock dividend and discount amortization requirements.

          Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding net of unvested shares of restricted stock.

          Diluted earnings per common share is calculated by dividing net income available to common shareholders adjusted for interest expense on convertible debt by the weighted average number of shares of common stock outstanding, adjusted for the dilutive effect of potential common shares issuable for stock options, warrants, restricted shares and convertible debt, as calculated using the treasury stock method. Such adjustments to the weighted average number of shares of common stock outstanding are made only when such adjustments dilute earnings per common share.

          The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share data):

		Three Months Ended
		March 31,
		2009				2008
Net income available to common shareholders — basic earnings per share		$	14,308			$	16,491
Interest expense on convertible debt			5				6
Net income available to common shareholders after assumed conversion — diluted earnings per share		$	14,313			$	16,497
Basic weighted average common shares outstanding			89,383,243				60,219,800
Net effect of dilutive stock options, warrants, restricted stock and convertible debt			191,704				372,372
Diluted weighted average common shares outstanding			89,574,947				60,592,172
Basic earnings per common share		$	0.16			$	0.27
Diluted earnings per common share		$	0.16			$	0.27

          For the three months ended March 31, 2009 and 2008, options to purchase 1,119,874 and 9,550 shares of common stock, respectively, were outstanding but not included in the computation of diluted earnings per share because they were antidilutive. For the three months ended March 31, 2009, warrants to purchase 1,347,607 shares of common stock were outstanding but not included in the computation of diluted earnings per share because they were antidilutive.

STOCK INCENTIVE PLANS

Restricted Stock

          The Corporation issues restricted stock awards, consisting of both restricted stock and restricted stock units, to key employees under its Incentive Compensation Plans (Plans). The grant date fair value of the restricted stock awards is equal to the price of the Corporation’s common stock on the grant date. For the three months ended March 31, 2009 and 2008, the Corporation issued 367,308 and 245,255 restricted stock awards with aggregate weighted average grant date fair values of $2.8 million and $3.3 million, respectively. The Corporation has available up to 2,925,573 shares of common stock to issue under these Plans.

          Under the Plans, more than half of the restricted stock awards granted to management are earned if the Corporation meets or exceeds certain financial performance results when compared to its peers. These performance-related awards are expensed ratably from the date that the likelihood of meeting the performance measure is probable through the end of a four-year vesting period. The service-based awards are expensed ratably over a three-year vesting period. The Corporation also issues discretionary service-based awards to certain employees that vest over five years.

          The unvested restricted stock awards are eligible to receive cash dividends which are ultimately used to purchase additional shares of stock. Any additional shares of stock ultimately received as a result of cash dividends are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met. These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the award agreements.

          Share-based compensation expense related to restricted stock awards was $0.6 million for both the three months ended March 31, 2009 and 2008, the tax benefit of which was $0.2 million for both periods.

          The following table summarizes certain information concerning restricted stock awards:

		Three Months Ended March 31,
		2009								2008
						Weighted								Weighted
						Average								Average
		Awards				Grant Price				Awards				Grant Price
Unvested awards outstanding at beginning of period			527,101			$	15.34				387,064			$	17.59
Granted			367,308				7.65				245,255				13.51
Vested			(98,695	)			17.66				(96,707	)			18.79
Forfeited			(66,035	)			14.99				(374	)			18.24
Dividend reinvestment			6,384				7.32				8,426				15.24
Unvested awards outstanding at end of period			736,063				11.15				543,664				15.50

          The total fair value of awards vested was $1.0 million and $1.3 million for the three months ended March 31, 2009 and 2008, respectively.

          As of March 31, 2009, there was $5.4 million of unrecognized compensation cost related to unvested restricted stock awards including $0.1 million that is subject to accelerated vesting under the Plan’s immediate vesting upon retirement provision for awards granted prior to the adoption of FAS 123R, Share-Based Payment, on January 1, 2006. The components of the restricted stock awards as of March 31, 2009 are as follows (dollars in thousands):

		Service-				Performance-
		Based				Based
		Awards				Awards				Total
Unvested awards			277,610				458,453				736,063
Unrecognized compensation expense		$	1,890			$	3,523			$	5,413
Intrinsic value		$	2,129			$	3,516			$	5,645
Weighted average remaining life (in years)			2.46				3.02				2.81

Stock Options

          There were no stock options granted during the three months ended March 31, 2009 or 2008. All outstanding stock options were granted at prices equal to the fair market value at the date of the grant, are primarily exercisable within ten years from the date of the grant and were fully vested as of January 1, 2006. The Corporation issues shares of treasury stock or authorized but unissued shares to satisfy stock option exercises. Shares issued upon the exercise of stock options were 1,404 and 5,258 for the three months ended March 31, 2009 and 2008, respectively.

          The following table summarizes certain information concerning stock option awards:

		Three Months Ended March 31,
		2009								2008
						Weighted								Weighted
						Average								Average
						Exercise								Exercise
		Shares				Price				Shares				Price
Options outstanding at beginning of period			1,299,317			$	14.00				1,139,845			$	11.75
Exercised			(1,404	)			15.53				(5,258	)			12.90
Forfeited			(149,044	)			14.01				(25,423	)			13.78
Options outstanding and exercisable at end of period			1,148,869				14.00				1,109,164				11.70

          The intrinsic value of outstanding and exercisable stock options at March 31, 2009 was $(7.8) million, since the fair value of the stock was less than the exercise price.

Warrants

          The Corporation assumed warrants to issue 123,394 shares of common stock at an exercise price of $10.00 in conjunction with a previous acquisition. Such warrants are exercisable and will expire on various dates in 2009. The Corporation has reserved shares of common stock for issuance in the event these warrants are exercised. As of March 31, 2009, warrants to purchase 45,524 shares of common stock remain outstanding.

          In conjunction with its participation in the CPP, the Corporation issued to the UST a warrant to purchase up to 1,302,083 shares of the Corporation’s common stock. The warrant, which is immediately exercisable, has a ten-year term and an exercise price of $11.52.

RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS

          The Corporation sponsors the Retirement Income Plan (RIP), a qualified noncontributory defined benefit pension plan covering substantially all salaried employees hired prior to January 1, 2008. The RIP covers employees who satisfy minimum age and length of service requirements. During 2006, the Corporation amended the RIP such that effective January 1, 2007, benefits are earned based on the employee’s compensation each year. The plan amendment resulted in a remeasurement that produced a net unrecognized service credit of $14.0 million, which is being amortized over the average period of future service of active employees of 13.5 years. Benefits of the RIP for service provided prior to December 31, 2006 are generally based on years of service and the employee’s highest compensation for five consecutive years during their last ten years of employment. During 2007, the Corporation amended the RIP such that it is closed to participants who commence employment with the Corporation on or after January 1, 2008. The Corporation’s funding guideline has been to make annual contributions to the RIP each year, if necessary, such that minimum funding requirements have been met. Based on the funded status of the plan, the Corporation does not expect to make a contribution to the RIP in 2009.

          The Corporation also sponsors two supplemental non-qualified retirement plans. The ERISA Excess Retirement Plan provides retirement benefits equal to the difference, if any, between the maximum benefit allowable under the Internal Revenue Code and the amount that would be provided under the RIP, if no limits were applied. The Basic Retirement Plan (BRP) is applicable to certain officers who are designated by the Board of Directors. Officers participating in the BRP receive a benefit based on a target benefit percentage based on years of service at retirement and a designated tier as determined by the Board of Directors. When a participant retires, the basic benefit under the BRP is a monthly benefit equal to the target benefit percentage times the participant’s highest average monthly cash

compensation during five consecutive calendar years within the last ten calendar years of employment. This monthly benefit is reduced by the monthly benefit the participant receives from Social Security, the RIP, the ERISA Excess Retirement Plan and the annuity equivalent of the two percent automatic contributions to the qualified 401(k) defined contribution plan and the ERISA Excess Lost Match Plan. The BRP was frozen as of December 31, 2008, at which time the Corporation recognized a one-time charge of $0.8 million. The Corporation expects an annual savings of approximately $0.3 million as a result of freezing its BRP.

          The net periodic benefit cost for the defined benefit plans includes the following components (in thousands):

		Three Months Ended
		March 31,
		2009				2008
Service cost		$	904			$	792
Interest cost			1,737				1,648
Expected return on plan assets			(1,795	)			(2,186	)
Amortization:
Unrecognized net transition asset			(23	)			(23	)
Unrecognized prior service (credit) cost			(299	)			(273	)
Unrecognized loss			689				184
Net periodic pension benefit cost		$	1,213			$	142

          The Corporation’s subsidiaries participate in a qualified 401(k) defined contribution plan under which eligible employees may contribute a percentage of their salary. The Corporation matches 50 percent of an eligible employee’s contribution on the first 6 percent that the employee defers. Employees are generally eligible to participate upon completing 90 days of service and having attained age 21. Beginning with 2007, in light of the change to the RIP benefit, the Corporation began making an automatic two percent contribution and may make an additional contribution of up to two percent depending on the Corporation achieving its performance goals for the plan year. Effective January 1, 2008, in lieu of the RIP benefit, the automatic contribution for substantially all new full-time employees was increased from two percent to four percent. The Corporation’s contribution expense was $1.0 million and $0.9 million for the three months ended March 31, 2009 and 2008, respectively.

          The Corporation also sponsors an ERISA Excess Lost Match Plan for certain officers. This plan provides retirement benefits equal to the difference, if any, between the maximum benefit allowable under the Internal Revenue Code and the amount that would have been provided under the qualified 401(k) defined contribution plan, if no limits were applied.

          The Corporation sponsors a pre-Medicare eligible postretirement medical insurance plan for retirees of certain affiliates between the ages of 62 and 65. During 2006, the Corporation amended the plan such that only employees who were age 60 or older as of January 1, 2007 are eligible for employer-paid coverage. The postretirement plan amendment resulted in a remeasurement that produced a net unrecognized service credit of $2.7 million, which has been amortized over the remaining service period of eligible employees of 1.3 years and was fully recognized during 2007. The Corporation has no plan assets attributable to this plan and funds the benefits as claims arise. Benefit costs related to this plan are recognized in the periods in which employees provide the service for such benefits. The Corporation reserves the right to terminate the plan or make plan changes at any time.

          The net periodic postretirement benefit cost includes the following components (in thousands):

		Three Months Ended
		March 31,
		2009				2008
Service cost		$	—			$	15
Interest cost			25				28
Amortization:
Unrecognized prior service credit			—				—
Unrecognized loss			1				1
Net periodic postretirement benefit cost		$	26			$	44

COMPREHENSIVE INCOME

          The components of comprehensive income, net of related tax, are as follows (in thousands):

		Three Months Ended
		March 31,
		2009				2008
Net income		$	15,651			$	16,491
Other comprehensive loss:
Unrealized losses on securities:
Arising during the period, net of tax benefit of $1,712 and $852			(3,179	)			(1,581	)
Less: reclassification adjustment for gains included in net income, net of tax benefit of $26 and $260			(49	)			(484	)
Unrealized loss on swap, net of tax benefit of $69			—				(128	)
Pension and postretirement amortization, net of tax expense (benefit) of $129 and ($41)			239				(76	)
Other comprehensive loss			(2,989	)			(2,269	)
Comprehensive income		$	12,662			$	14,222

          The accumulated balances related to each component of other comprehensive income (loss) are as follows (in thousands):

March 31		2009				2008
Unrealized losses on securities		$	(7,567	)		$	(2,686	)
Unrecognized pension and postretirement obligations			(21,927	)			(6,321	)
Accumulated other comprehensive loss		$	(29,494	)		$	(9,007	)

CASH FLOW INFORMATION

          Following is a summary of supplemental cash flow information (in thousands):

Three Months Ended March 31		2009				2008
Interest paid on deposits and other borrowings		$	34,929			$	39,560
Income taxes paid			—				2,500
Transfers of loans to other real estate owned			3,122				1,240
Financing of other real estate owned sold			220				39

BUSINESS SEGMENTS

          The Corporation operates in four reportable segments: Community Banking, Wealth Management, Insurance and Consumer Finance.

	•		The Community Banking segment provides services traditionally offered by full-service commercial banks, including commercial and individual demand, savings and time deposit accounts and commercial, mortgage and individual installment loans.
	•		The Wealth Management segment provides a broad range of personal and corporate fiduciary services including the administration of decedent and trust estates. In addition, it offers various alternative products, including securities brokerage and investment advisory services, mutual funds and annuities.
	•		The Insurance segment includes a full-service insurance agency offering all lines of commercial and personal insurance through major carriers. The Insurance segment also includes a reinsurer.
	•		The Consumer Finance segment is primarily involved in making installment loans to individuals and purchasing installment sales finance contracts from retail merchants. The Consumer Finance segment activity is funded through the sale of the Corporation’s subordinated notes at the finance company’s branch offices.

          The following tables provide financial information for these segments of the Corporation (in thousands). The information provided under the caption “Parent and Other” represents operations not considered to be reportable segments and/or general operating expenses of the Corporation, and includes the parent company, other non-bank subsidiaries and eliminations and adjustments which are necessary for purposes of reconciling to the consolidated amounts.

At or for the Three Months		Community				Wealth								Consumer				Parent and
Ended March 31, 2009		Banking				Management				Insurance				Finance				Other				Consolidated
Interest income		$	89,504			$	3			$	75			$	7,893			$	627			$	98,102
Interest expense			29,592				(1	)			—				1,475				2,954				34,020
Net interest income			59,912				4				75				6,418				(2,327	)			64,082
Provision for loan losses			9,000				—				—				1,404				110				10,514
Non-interest income			19,652				4,970				4,315				581				(1,339	)			28,179
Non-interest expense			47,919				4,000				3,010				3,802				426				59,157
Intangible amortization			1,616				92				107				—				—				1,815
Income tax expense (benefit)			5,231				315				448				650				(1,520	)			5,124
Net income (loss)			15,798				567				825				1,143				(2,682	)			15,651
Total assets			8,282,959				20,132				23,206				159,472				(30,972	)			8,454,797
Total intangibles			546,610				12,592				12,515				1,809				—				573,526

At or for the Three Months		Community				Wealth								Consumer				Parent and
Ended March 31, 2008		Banking				Management				Insurance				Finance				Other				Consolidated
Interest income		$	80,668			$	18			$	105			$	7,853			$	(119	)		$	88,525
Interest expense			35,523				2				—				1,509				2,526				39,560
Net interest income			45,145				16				105				6,344				(2,645	)			48,965
Provision for loan losses			2,530				—				—				1,053				—				3,583
Non-interest income			15,492				4,005				3,362				625				(1,316	)			22,168
Non-interest expense			34,257				3,062				2,646				3,584				(259	)			43,290
Intangible amortization			956				6				111				—				—				1,073
Income tax expense (benefit)			6,638				339				258				836				(1,375	)			6,696
Net income (loss)			16,256				614				452				1,496				(2,327	)			16,491
Total assets			5,978,644				7,172				22,588				155,192				994				6,164,590
Total intangibles			246,661				1,246				10,768				1,809				—				260,484

FAIR VALUE MEASUREMENTS

          The Corporation uses fair value measurements to record fair value adjustments to certain financial assets and liabilities and to determine fair value disclosures. Securities available for sale and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record at fair value other assets on a nonrecurring basis, such as mortgage loans held for sale, certain impaired loans, other real estate owned (OREO) and certain other assets.

          Fair value is defined as an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are not adjusted for transaction costs. Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure.

          In determining fair value, the Corporation uses various valuation approaches, including market, income and cost approaches. FAS 157 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, which are developed based on market data obtained from sources independent of the Corporation. Unobservable inputs reflect the Corporation’s assumptions about the assumptions that market participants would use in pricing an asset or liability, which are developed based on the best information available in the circumstances.

          The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value hierarchy under FAS 157 is broken down into three levels based on the reliability of inputs as follows:

Level 1		valuation is based upon unadjusted quoted market prices for identical instruments traded in active markets.
Level 2		valuation is based upon quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by market data.
Level 3		valuation is derived from other valuation methodologies including discounted cash flow models and similar techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in determining fair value.

          A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

          Following is a description of valuation methodologies used for financial instruments recorded at fair value on either a recurring or nonrecurring basis:

Securities Available For Sale

          Securities available-for-sale consists of both debt and equity securities. These securities are recorded at fair value on a recurring basis. At March 31, 2009, approximately 96.6% of these securities used valuation methodologies involving market-based or market-derived information, collectively Level 1 and Level 2 measurements, to measure fair value. The remaining 3.4% of these securities were measured using model-based techniques, with primarily unobservable (Level 3) inputs.

          The Corporation closely monitors market conditions involving assets that have become less actively traded. If the fair value measurement is based upon recent observable market activity of such assets or comparable assets (other than forced or distressed transactions) that occur in sufficient volume, and do not require significant adjustment using unobservable inputs, those assets are classified as Level 1 or Level 2; if not, they are classified as Level 3. Making this assessment requires significant judgment.

          The Corporation uses prices from independent pricing services and to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of investment securities. The Corporation validates prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices, and review of pricing by Corporate personnel familiar with market liquidity and other market related conditions.

          Valuation of its trust preferred debt securities is determined by the Corporation with the assistance of a third-party independent financial consulting firm that specializes in advisory services related to illiquid financial investments. The consulting firm provides the Corporation fully-documented valuation reports based on consensus with the firm as to appropriate valuation methodology, performance assumptions, modeling techniques, discounted cash flows, discount rates and sensitivity analyses with respect to levels of defaults and deferrals necessary to produce losses. Additionally, the Corporation utilizes the firm’s expertise to reassess assumptions to reflect actual conditions. Accessing the services of a financial consulting firm with a focus on financial instruments assists the Corporation in accurately valuing these complex financial instruments and facilitates informed decision-making with respect to such instruments.

Derivative Financial Instruments

          Fair value for derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects contractual terms of the derivative, including the period to maturity and uses observable market based inputs, including interest rate curves and implied volatilities.

          To comply with the provisions of FAS 157, the Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of non-performance risk, the Corporation has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

          Although the Corporation has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2009, the Corporation has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Corporation has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Residential Mortgage Loans Held For Sale

          These loans are carried at the lower of cost or fair value. Under lower-of-cost-or-fair value accounting, periodically, it may be necessary to record nonrecurring fair value adjustments. Fair value, when recorded, is generally based on independent quoted market prices and is classified as Level 2. When observable inputs are not available, fair value is estimated based on the present value of expected future cash flows using the Corporation’s best estimates of key assumptions. The Corporation classifies residential mortgage loans held for sale that are valued in this manner as Level 3 because significant unobservable inputs are used.

Impaired Loans

          The Corporation reserves for commercial and commercial real estate loans that the Corporation considers impaired as defined in FAS 114 at the time the Corporation identifies the loan as impaired based upon the present value of expected future cash flows available to pay the loan, or based upon the fair value of the collateral less estimated selling costs where a loan is collateral dependent. Collateral may be real estate and/or business assets including equipment, inventory and accounts receivable.

     The Corporation determines the value of real estate based on appraisals by licensed or certified appraisers. The value of business assets is generally based on amounts reported on the business’s financial statements. Management