UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2008

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

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 October 31, 2008
Common Stock, $0.01 Par Value		89,653,853 Shares

 

 

F.N.B. CORPORATION
FORM 10-Q
September 30, 2008
INDEX

		PAGE
PART I — FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets			2
Consolidated Statements of Income			3
Consolidated Statements of Stockholders’ Equity			4
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Report of Independent Registered Public Accounting Firm			26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3. Quantitative and Qualitative Disclosures About Market Risk			43
Item 4. Controls and Procedures			43
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Defaults Upon Senior Securities			44
Item 4. Submission of Matters to a Vote of Security Holders			44
Item 5. Other Information			44
Item 6. Exhibits			45
Signatures			46
EX-15
EX-31.1
EX-31.2
EX-32.1
EX-32.2

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except par value

		September 30,				December 31,
		2008				2007
		(Unaudited)
Assets
Cash and due from banks		$	168,576			$	130,235
Interest bearing deposits with banks			3,640				482
Securities available for sale			505,637				358,421
Securities held to maturity (fair value of $819,714 and $665,914)			830,143				667,553
Loans held for sale			6,716				5,637
Loans, net of unearned income of $33,346 and $25,747			5,876,041				4,344,235
Allowance for loan losses			(74,755	)			(52,806	)
Net Loans			5,801,286				4,291,429
Premises and equipment, net			122,819				80,472
Goodwill			528,222				242,120
Core deposit and other intangible assets, net			49,096				19,439
Bank owned life insurance			216,665				133,885
Other assets			224,551				158,348
Total Assets		$	8,457,351			$	6,088,021
Liabilities
Deposits:
Non-interest bearing demand		$	939,561			$	626,141
Savings and NOW			2,888,899				2,037,160
Certificates and other time deposits			2,313,397				1,734,383
Total Deposits			6,141,857				4,397,684
Other liabilities			78,834				63,760
Short-term borrowings			563,382				449,823
Long-term debt			496,649				481,366
Junior subordinated debt owed to unconsolidated subsidiary trusts			205,555				151,031
Total Liabilities			7,486,277				5,543,664
Stockholders’ Equity
Common stock — $0.01 par value
Authorized - 500,000,000 shares
Issued - 89,668,861 and 60,602,218 shares			893				602
Additional paid-in capital			952,330				508,891
Retained earnings			39,385				42,426
Accumulated other comprehensive income			(20,934	)			(6,738	)
Treasury stock - 34,698 and 47,970 shares at cost			(600	)			(824	)
Total Stockholders’ Equity			971,074				544,357
Total Liabilities and Stockholders’ Equity		$	8,457,351			$	6,088,021

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								Nine Months Ended
		September 30,								September 30,
		2008				2007				2008				2007
Interest Income
Loans, including fees		$	93,673			$	81,392			$	260,907			$	238,048
Securities:
Taxable			13,281				10,971				36,210				32,899
Nontaxable			1,717				1,462				4,903				4,280
Dividends			48				59				227				231
Other			82				65				376				598
Total Interest Income			108,801				93,949				302,623				276,056
Interest Expense
Deposits			28,379				32,111				84,190				93,686
Short-term borrowings			3,166				5,264				10,197				14,450
Long-term debt			5,231				4,651				15,889				14,276
Junior subordinated debt owed to unconsolidated subsidiary trusts			3,120				2,765				8,920				8,217
Total Interest Expense			39,896				44,791				119,196				130,629
Net Interest Income			68,905				49,158				183,427				145,427
Provision for loan losses			6,514				3,776				21,073				7,461
Net Interest Income After Provision for Loan Losses			62,391				45,382				162,354				137,966
Non-Interest Income
Service charges			15,002				10,286				40,048				30,116
Insurance commissions and fees			3,959				3,301				12,064				10,950
Securities commissions and fees			2,010				1,595				5,628				4,521
Trust fees			3,215				2,109				9,014				6,389
Gain on sale of securities			34				—				829				1,155
Impairment loss on equity securities			(25	)			(7	)			(491	)			(118	)
Gain on sale of mortgage loans			477				455				1,458				1,181
Bank owned life insurance			1,796				1,028				4,679				3,018
Other			1,765				915				4,628				3,761
Total Non-Interest Income			28,233				19,682				77,857				60,973
Non-Interest Expense
Salaries and employee benefits			29,707				22,030				87,283				65,771
Net occupancy			4,494				3,623				13,071				11,094
Equipment			4,278				3,244				11,760				9,902
Amortization of intangibles			2,162				1,099				4,454				3,305
Outside services			5,205				3,671				15,326				12,071
Other			12,065				7,611				32,394				22,853
Total Non-Interest Expense			57,911				41,278				164,288				124,996
Income Before Income Taxes			32,713				23,786				75,923				73,943
Income taxes			9,208				6,162				21,422				21,327
Net Income		$	23,505			$	17,624			$	54,501			$	52,616
Net Income per Common Share
Basic		$	0.27			$	0.29			$	0.70			$	0.88
Diluted			0.27				0.29				0.70				0.87
Cash Dividends per Common Share			0.24				0.24				0.72				0.71

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-
		Compre-								Additional								hensive
		hensive				Common				Paid-In				Retained				Income				Treasury
		Income				Stock				Capital				Earnings				(Loss)				Stock				Total
Balance at January 1, 2008						$	602			$	508,891			$	42,426			$	(6,738	)		$	(824	)		$	544,357
Net income		$	54,501												54,501												54,501
Change in other comprehensive (loss)			(14,196	)															(14,196	)							(14,196	)
Comprehensive income		$	40,305
Cash dividends declared:
Common stock $0.72/share															(56,718	)											(56,718	)
Issuance of common stock							291				440,874				(218	)							224				441,171
Restricted stock compensation											1,789																1,789
Tax benefit of stock-based compensation											776																776
Adjustment to initially apply EITF 06-04 and 06-10															(606	)											(606	)
Balance at September 30, 2008						$	893			$	952,330			$	39,385			$	(20,934	)		$	(600	)		$	971,074
Balance at January 1, 2007						$	601			$	506,024			$	33,321			$	(1,546	)		$	(1,028	)		$	537,372
Net income		$	52,616												52,616												52,616
Change in other comprehensive (loss)			(4,617	)															(4,617	)							(4,617	)
Comprehensive income		$	47,999
Cash dividends declared:
Common stock $0.71/share															(42,919	)											(42,919	)
Purchase of common stock																							(9,175	)			(9,175	)
Issuance of common stock							1				69				(1,858	)							9,412				7,624
Restricted stock compensation											1,284																1,284
Tax benefit of stock-based compensation											582																582
Cumulative effect of change in accounting for uncertainties in income taxes															(1,174	)											(1,174	)
Balance at September 30, 2007						$	602			$	507,959			$	39,986			$	(6,163	)		$	(791	)		$	541,593

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
Unaudited

		Nine Months Ended
		September 30,
		2008				2007
Operating Activities
Net income		$	54,501			$	52,616
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion			15,836				10,285
Provision for loan losses			21,073				7,461
Deferred taxes			(2,703	)			2,996
Gain on sale of securities			(338	)			(1,037	)
Tax benefit of stock-based compensation			(776	)			(582	)
Net change in:
Interest receivable			2,314				(2,362	)
Interest payable			(137	)			(186	)
Loans held for sale			(1,079	)			(3,176	)
Trading securities			264,416				—
Bank owned life insurance			(3,671	)			(2,562	)
Other, net			(16,141	)			3,735
Net cash flows provided by operating activities			333,295				67,188
Investing Activities
Net change in:
Interest bearing deposits with banks			3,465				(1,081	)
Loans			(302,606	)			(114,801	)
Securities available for sale:
Purchases			(320,611	)			(189,343	)
Sales			2,521				3,162
Maturities			173,649				133,969
Securities held to maturity:
Purchases			(256,643	)			(51,075	)
Maturities			117,525				98,625
Purchase of bank owned life insurance			(22	)			—
Increase in premises and equipment			(12,588	)			(3,203	)
Acquisitions, net of cash acquired			57,596				—
Net cash flows used in investing activities			(537,714	)			(123,747	)
Financing Activities
Net change in:
Non-interest bearing deposits, savings and NOW accounts			254,390				150,094
Time deposits			(55,359	)			(38,752	)
Short-term borrowings			85,778				87,278
Increase in long-term debt			109,669				112,249
Decrease in long-term debt			(102,385	)			(198,447	)
Decrease in junior subordinated debt			(337	)			—
Purchase of common stock			—				(9,175	)
Issuance of common stock			6,946				6,243
Tax benefit of stock-based compensation			776				582
Cash dividends paid			(56,718	)			(42,919	)
Net cash flows provided by financing activities			242,760				67,153
Net Increase in Cash and Due from Banks			38,341				10,594
Cash and due from banks at beginning of period			130,235				122,362
Cash and Due from Banks at End of Period		$	168,576			$	132,956

See accompanying Notes to Consolidated Financial Statements

F.N.B. CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2008

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, Ohio, 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, 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 rules and regulations of the Securities and Exchange Commission (Commission). 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 Commission on February 29, 2008.

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 valuation, goodwill and other intangible assets and income taxes.

MERGERS AND ACQUISITIONS

          On August 16, 2008, the Corporation completed its acquisition of Iron and Glass Bancorp, Inc. (IRGB), a bank holding company with $301.7 million in assets, which included $168.8 million in loans, and $252.3 million in deposits based in Pittsburgh, Pennsylvania. 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 their 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.

          On April 1, 2008, the Corporation completed its acquisition of Omega Financial Corporation (Omega), a diversified financial services company with $1.8 billion in assets, which included $1.1 billion in loans, and $1.3 billion in deposits based in State College, Pennsylvania. 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 their 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.

          The following table shows the calculation of the preliminary purchase price and the resulting goodwill relating to the Omega acquisition (in thousands):

Fair value of stock issued and stock options assumed						$	388,176
Fair value of:
Tangible assets acquired		$	1,533,638
Core deposit and other intangible assets acquired			31,191
Liabilities assumed			(1,463,533	)
Net cash received in the acquisition			50,415
Fair value of net assets acquired							151,711
Goodwill recognized						$	236,465

          The Corporation has not yet finalized its determination of the fair values of certain acquired assets and liabilities relating to the Omega acquisition and will adjust goodwill upon completion of the valuation process.

          The following table summarizes the estimated fair value of the net assets that the Corporation acquired from Omega (in thousands):

Assets
Cash and due from banks		$	57,018
Federal funds sold			52,400
Securities			256,837
Loans			1,076,283
Goodwill and other intangible assets			267,656
Accrued income and other assets			141,515
Total assets			1,851,709
Liabilities
Deposits			1,291,483
Borrowings			157,241
Accrued expenses and other liabilities			14,809
Total liabilities			1,463,533
Purchase price		$	388,176

          The following unaudited summary financial information presents the consolidated results of operations of the Corporation on a pro forma basis, as if the Omega acquisition had occurred at the beginning of each of the periods presented (dollars in thousands, except per share data):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2008				2007				2008				2007
Net interest income		$	68,905			$	66,336			$	199,569			$	196,827
Provision for loan losses			6,514				3,981				24,508				9,021
Net interest income after provision for loan losses			62,391				62,355				175,061				187,806
Non-interest income			28,233				26,912				84,727				82,070
Non-interest expense			57,911				56,514				181,536				170,404
Income before taxes			32,713				32,753				78,252				99,472
Income taxes			9,208				8,427				21,703				27,896
Net income		$	23,505			$	24,326			$	56,549			$	71,576
Net income per common share
Basic		$	0.27			$	0.28			$	0.66			$	0.84
Diluted			0.27				0.28				0.66				0.83

          The pro forma results include the amortization of the fair value adjustments on loans, deposits and debt and the amortization of the newly created intangible assets and post-merger acquisition related expenses. The pro forma results for the nine months ended September 30, 2008 also include $3.6 million pre-tax for certain non-recurring items, including personnel expense for retention bonuses and severance payments. The pro forma results do not reflect cost savings or revenue enhancements anticipated from the acquisition, and are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results. Actual results of operations of the Corporation for the periods noted above are listed in the Corporation’s consolidated statement of income provided elsewhere in this Report.

NEW ACCOUNTING STANDARDS

Disclosures about Derivative Instruments and Hedging Activities

          In March 2008, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards Board Statement (FAS) 161, Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement No. 133, which enhances disclosures about derivatives and hedging activities and thereby improves the transparency of financial reporting. FAS 161 is effective for the Corporation on January 1, 2009. The Corporation has not yet determined the impact that the adoption of FAS 161 will have on its consolidated financial statements.

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 has not been used by the Corporation in recognizing and measuring the Omega and IRGB acquisitions. The Corporation has not yet determined the impact that the adoption of FAS 141R will have on its consolidated financial statements.

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. FAS 160 is effective for the Corporation on January 1, 2009. Earlier adoption is prohibited. The Corporation has not yet determined the impact that the adoption of FAS 160 will have on its consolidated financial statements.

Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards

          In June 2007, the FASB ratified the consensus reached in Emerging Issues Task Force (EITF) 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards. EITF 06-11 applies to companies that have share-based payment arrangements that entitle employees to receive dividends or dividend equivalents on equity-classified nonvested shares when those dividends or dividend equivalents are charged to retained earnings and result in an income tax deduction. Companies that have share-based payment arrangements that fall within the scope of EITF 06-11 will be required to increase capital surplus for any realized income tax benefit associated with dividend or dividend equivalents paid to employees for equity classified nonvested equity awards. Any increase recorded to capital surplus is required to be included in a company’s pool of excess tax benefits that are available to absorb potential future tax deficiencies on share-based payment awards. The application of this guidance did not impact the Corporation’s consolidated financial statements since dividends accrued on its unvested awards are subject to forfeiture.

Accounting for Collateral Assignment Split Dollar Life Insurance

          In March 2007, the FASB ratified EITF 06-10, Accounting for Collateral Assignment Split Dollar Life Insurance. EITF 06-10 concludes that an employer should recognize a liability for the postretirement benefit related to a collateral assignment split dollar life insurance arrangement in accordance with either FAS 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, or APB Opinion No. 12, Ominbus Opinion — 1967, if the employer has agreed to maintain a life insurance policy during the employee’s retirement or to provide the employee with a death benefit based on the substantive arrangement with the employee. EITF 06-10 also concludes that an employer should recognize and measure an asset based on the nature and substance of the collateral assignment split dollar life insurance arrangement. The determination of the nature and substance of the arrangement should involve an evaluation of all available information, including an assessment of the future cash flows to which the employer is entitled and the employee’s obligation and ability to repay the employer. The Corporation adopted EITF 06-10 on January 1, 2008 resulting in a decrease of $0.7 million in retained earnings and an increase of $0.7 million in accrued bank owned life insurance.

Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life Insurance Arrangements

          In September 2006, the FASB ratified EITF 06-04, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life Insurance Arrangements. EITF 06-04 concludes that an employer should recognize a liability for the future benefits related to an endorsement split dollar life insurance arrangement in accordance with either FAS 106 or APB Opinion No. 12, Ominbus Opinion — 1967. The Corporation adopted EITF 06-04 on January 1, 2008 resulting in an increase of $0.1 million in retained earnings and a decrease of $0.1 million in accrued bank owned life insurance.

The Fair Value Option for Financial Assets and Financial Liabilities

          In February 2007, the FASB issued FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, which allows companies to report certain financial assets and liabilities at fair value with the changes in fair value included in earnings. In general, a company may elect the fair value option for an eligible financial asset or financial liability when it first recognizes the instrument on its balance sheet or enters into an eligible firm commitment. A company may also elect the fair value option for eligible items that exist on the effective date of FAS 159. A company’s decision to elect the fair value option for an eligible item is irrevocable. The Corporation did not elect the fair value option for eligible financial assets or financial liabilities.

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 February 2008, the FASB issued FASB Staff Position (FSP) 157-2, which delays the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP 157-2 are effective for the Corporation on January 1, 2009. The Corporation has not yet determined the impact that the adoption of FAS 157, as it pertains to nonfinancial assets and nonfinancial liabilities, will have on its consolidated financial statements.

          On October 10, 2008, the FASB issued FSP 157-3, 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 FSP is effective immediately and applies to prior periods for which financial statements have not been issued, including interim or annual periods ending on or before September 30, 2008. Accordingly, the Corporation adopted the FSP prospectively, beginning July 1, 2008 and considered this guidance in determining fair value measurements on September 30, 2008.

SECURITIES

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

		September 30,				December 31,
		2008				2007
U.S. Treasury and other U.S. government agencies and corporations		$	279,714			$	162,839
Mortgage-backed securities of U.S. government agencies			120,355				72,267
States of the U.S. and political subdivisions			68,392				71,490
Corporate debt securities			33,024				46,207
Total debt securities			501,485				352,803
Equity securities			4,152				5,618
		$	505,637			$	358,421

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

		September 30,				December 31,
		2008				2007
U.S. Treasury and other U.S. government agencies and corporations		$	506			$	11,004
Mortgage-backed securities of U.S. government agencies			706,422				547,046
States of the U.S. and political subdivisions			116,240				102,179
Corporate and other debt securities			6,975				7,324
		$	830,143			$	667,553

          The Corporation sold $1.8 million of equity securities at a gain of $0.1 million for the nine months ended September 30, 2008 and sold $2.9 million of equity securities at a gain of $1.0 million for the nine months ended September 30, 2007. Additionally, the Corporation recognized a one-time gain of $0.7 million relating to the VISA, Inc. initial public offering during the nine months ended September 30, 2008. The Corporation recognized a loss of $0.5 million and $0.1 million during the nine months ended September 30, 2008 and 2007, respectively, due to the write-down to market value of equity securities that were deemed to be other-than-temporarily impaired. The Corporation also recognized a gain of $0.1 million relating to $6.6 million of called securities during the nine months ended September 30, 2007. None of the security sales or calls were at a loss.

          The Corporation conducts other-than-temporary impairment analysis on a quarterly basis. The initial indication of other-than-temporary impairment for both debt and equity securities is a decline in the market value below the amount recorded for an investment. A decline in value that is considered to be other-than-temporary is recorded as a loss within non-interest income in the consolidated statement of income.

          In determining whether an impairment is other than temporary, the Corporation considers a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the Corporation’s intent and ability to retain the security for a period of time sufficient to allow for a recovery in market value or maturity. Among the factors that are considered in determining the Corporation’s intent and ability is a review of its capital adequacy, interest rate risk position and liquidity.

          The Corporation also considers the issuer’s financial condition, capital strength and near-term prospects. In addition, for debt securities and perpetual preferred securities that are treated as debt securities for the purpose of other-than-temporary analysis, the Corporation considers the cause of the price decline (general level of interest rates and industry- and issuer-specific factors), current ability to make future payments in a timely manner and the issuer’s ability to service debt.

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

          Certain of the corporate debt securities are accounted for under EITF 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests that Continue to Be Held by a Tranferor in Securitized Financial Assets. For investments within the scope of EITF 99-20 at acquisition, 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 interest rates and appropriate risk premiums, the timing and amount of interest and principal payments and the allocation of payments to the various note classes. Current estimates of cash flows are based on the most recent trustee reports, announcements of deferrals or defaults, expected future default rates and other relevant market information. At September 30, 2008, the Corporation concluded that no adverse change in cash flows occurred during the third quarter.

          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				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
September 30, 2008
U.S. Treasury and other U.S. government agencies and corporations		$	249,653			$	(2,742	)		$	—			$	—			$	249,653			$	(2,742	)
Mortgage-backed securities of U.S. government agencies			39,021				(444	)			—				—				39,021				(444	)
States of the U.S. and political subdivisions			56,834				(3,745	)			—				—				56,834				(3,745	)
Corporate debt securities			7,890				(2,971	)			25,134				(14,098	)			33,024				(17,069	)
Equity securities			1,447				(409	)			58				(42	)			1,505				(451	)
		$	354,845			$	(10,311	)		$	25,192			$	(14,140	)		$	380,037			$	(24,451	)

		Less than 12 Months								Greater than 12 Months								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
December 31, 2007
Mortgage-backed securities of U.S. government agencies		$	—			$	—			$	14,673			$	(138	)		$	14,673			$	(138	)
States of the U.S. and political subdivisions			23,806				(155	)			11,934				(200	)			35,740				(355	)
Corporate debt securities			34,407				(3,879	)			3,568				(451	)			37,975				(4,330	)
Equity securities			636				(302	)			13				(10	)			649				(312	)
		$	58,849			$	(4,336	)		$	30,188			$	(799	)		$	89,037			$	(5,135	)

Securities held to maturity:

		Less than 12 Months								Greater than 12 Months								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
September 30, 2008
Mortgage-backed securities of U.S. government agencies		$	406,547			$	(8,430	)		$	11,582			$	(1,295	)		$	418,129			$	(9,725	)
States of the U.S. and political subdivisions			82,277				(2,132	)			40				—				82,317				(2,132	)
Corporate debt securities			5,337				(868	)			—				—				5,337				(868	)
		$	494,161			$	(11,430	)		$	11,622			$	(1,295	)		$	505,783			$	(12,725	)
December 31, 2007
Mortgage-backed securities of U.S. government agencies		$	47,051			$	(432	)		$	280,433			$	(3,433	)		$	327,484			$	(3,865	)
States of the U.S. and political subdivisions			1,030				—				37,206				(134	)			38,236				(134	)
Corporate debt securities			5,726				(101	)			120				—				5,846				(101	)
		$	53,807			$	(533	)		$	317,759			$	(3,567	)		$	371,566			$	(4,100	)

          As of September 30, 2008, securities with unrealized losses for less than 12 months include 18 investments in U.S. Treasury and other U.S. government agencies and corporations, 70 investments in mortgage-backed securities of U.S. government agencies, 200 investments in states of the U.S. and political subdivision securities, 14 investments in corporate debt securities and 18 investments in equity securities. As of September 30, 2008, securities with unrealized losses of greater than 12 months include 3 investments in mortgage-backed securities of U.S. government agencies, 1 investment in states of the U.S. and political subdivision securities, 18 investments in corporate debt securities and 1 investment in equity securities. The Corporation has concluded that it has both the intent and 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 generally in mezzanine tranches, 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 financial crisis affecting these markets, as well as changes in interest rates.

          The Corporation analyzed the cash flow characteristics of these securities. Based on this analysis and because the Corporation has the intent and ability to hold these securities until recovery of fair value, which may be at maturity; and, for investments within the scope of EITF 99-20, determined that there was no adverse change in the cash flows as viewed by a market participant, the Corporation does not consider the investments in these assets to be other-than-temporarily impaired at September 30, 2008. However, there is a risk that this review could result in recognition of other-than-temporary impairment charges in the future.

          As of September 30, 2008, management does not believe any unrealized loss represents an other-than-temporary impairment. The unrealized losses at September 30, 2008 on securities other than trust preferred securities were primarily interest rate-related.

BORROWINGS

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

		September 30,				December 31,
		2008				2007
Securities sold under repurchase agreements		$	384,096			$	276,552
Subordinated notes			101,064				112,779
Federal Home Loan Bank advances			50,000				—
Federal funds purchased			28,000				60,000
Other short-term borrowings			222				492
		$	563,382			$	449,823

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

		September 30,				December 31,
		2008				2007
Federal Home Loan Bank advances		$	442,017			$	427,099
Subordinated notes			53,810				53,404
Convertible debt			613				658
Other long-term debt			210				205
		$	496,650			$	481,366

          The Corporation’s banking affiliate has available credit with the Federal Home Loan Bank (FHLB) of $1.9 billion, of which $492.0 million was used as of September 30, 2008. 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 5.75% for the nine months ended September 30, 2008 and 2.79% to 5.75% for the year ended December 31, 2007.

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 guidelines subject to certain limitations beginning March 31, 2009. 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 September 30, 2008 (dollars in thousands):

		F.N.B.				F.N.B.								Sun Bancorp
		Statutory				Statutory				Omega Financial				Statutory
		Trust I				Trust II				Capital Trust				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				35,755				18,769
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			6.05	%			7.17	%			5.98	%			10.20	%
		variable;				fixed until 6/15/11;				fixed until 10/09;
		LIBOR plus				then LIBOR plus				then LIBOR plus 219
		325 basis points				165 basis points				basis points

INTEREST RATE SWAPS

          In February 2005, the Corporation entered into an interest rate swap with a notional amount of $125.0 million, whereby it paid a fixed rate of interest and received a variable rate based on the London Inter-Bank Offered Rate (LIBOR). The effective date of the swap was January 3, 2006 and the maturity date of the swap was March 31, 2008. The interest rate swap was a designated cash flow hedge designed to convert the variable interest rate to a fixed rate on $125.0 million of subordinated debentures. The swap was considered to be highly effective and assessment of the hedging relationship was evaluated under Derivative Implementation Group Issue No. G7 using the hypothetical derivative method.

          The Corporation’s interest rate swap program for commercial loans provides the customer with fixed rate loans while creating a variable rate asset for the Corporation. The notional amount of swaps under this program totalled $147.0 million as of September 30, 2008.

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):

		September 30,				December 31,
		2008				2007
Commitments to extend credit		$	1,242,307			$	938,277
Standby letters of credit			100,200				76,708

          At September 30, 2008, funding of approximately 76.6% 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 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. It is possible, in the event of unexpected future developments, that the ultimate resolution of these matters, if unfavorable, may have a material adverse effect on the Corporation’s consolidated results of operations for a particular period.

EARNINGS PER SHARE

          Basic earnings per common share is calculated by dividing net income 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 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 share (dollars in thousands, except per share data):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2008				2007				2008				2007
Net income — basic earnings per share		$	23,505			$	17,624			$	54,501			$	52,616
Interest expense on convertible debt			5				5				15				17
Net income after assumed conversion — Diluted earnings per share		$	23,510			$	17,629			$	54,516			$	52,633
Basic weighted average common shares outstanding			87,291,008				60,154,574				77,749,543				60,129,145
Net effect of dilutive stock options, warrants, restricted stock and convertible debt			284,146				485,912				362,527				503,231
Diluted weighted average common shares outstanding			87,575,154				60,640,486				78,112,070				60,632,376
Basic earnings per share		$	0.27			$	0.29			$	0.70			$	0.88
Diluted earnings per share		$	0.27			$	0.29			$	0.70			$	0.87

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 nine months ended September 30, 2008, the Corporation issued 245,255 restricted stock awards with an aggregate weighted average grant date fair value of $3.3 million. The Corporation did not issue any restricted stock awards for the nine months ended September 30, 2007. The Corporation has available up to 2,998,010 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 $1.9 million and $1.3 million for the nine months ended September 30, 2008 and 2007, the tax benefit of which was $0.7 million and $0.4 million, respectively.

          The following table summarizes certain information concerning restricted stock awards:

		Nine Months Ended September 30,
		2008								2007
						Weighted								Weighted
						Average								Average
						Grant								Grant
		Awards				Price				Awards				Price
Unvested awards outstanding at beginning of period			387,064			$	17.59				302,264			$	18.54
Granted			245,255				13.51				146,885				16.13
Vested			(114,675	)			18.58				(54,448	)			18.56
Forfeited			(27,441	)			14.67				(4,254	)			17.97
Dividend reinvestment			26,756				14.24				12,701				16.74
Unvested awards outstanding at end of period			516,959				15.41				403,148				17.61

          The total fair value of awards vested was $1.5 million and $1.0 million for the nine months ended September 30, 2008 and 2007, respectively.

          As of September 30, 2008, there was $3.9 million of unrecognized compensation cost related to unvested restricted stock awards including $0.3 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 September 30, 2008 are as follows (dollars in thousands):

		Service-				Performance-
		Based				Based
		Awards				Awards				Total
Unvested awards			201,939				315,020				516,959
Unrecognized compensation expense		$	1,369			$	2,579			$	3,948
Intrinsic value		$	3,227			$	5,034			$	8,261
Weighted average remaining life (in years)			2.21				2.68				2.49

Stock Options

          There were no stock options granted during the nine months ended September 30, 2008 or 2007. 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 485,607 and 295,620 for the nine months ended September 30, 2008 and 2007, respectively.

          The following table summarizes certain information concerning stock option awards:

		Nine Months Ended September 30,
		2008								2007
						Weighted								Weighted
						Average								Average
						Exercise								Exercise
		Shares				Price				Shares				Price
Options outstanding at beginning of period			1,139,845			$	11.75				1,450,225			$	11.69
Assumed in acquisition			845,969				16.00				—				—
Exercised			(485,607	)			11.74				(301,456	)			11.48
Forfeited			(99,217	)			17.68				—				—
Options outstanding and exercisable at end of period			1,400,990				13.90				1,148,769				11.75

          The intrinsic value of outstanding and exercisable stock options at September 30, 2008 was $1.0 million.

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 September 30, 2008, warrants to purchase 53,559 shares of common stock remain outstanding.

RETIREMENT AND OTHER POSTRETIREMENT BENEFIT PLANS

          The Corporation sponsors the F.N.B. Corporation 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 new 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 2008.

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

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2008				2007				2008				2007
Service cost		$	935			$	786			$	2,518			$	2,483
Interest cost			1,794				1,548				5,090				4,636
Expected return on plan assets			(2,409	)			(2,141	)			(6,780	)			(6,426	)
Amortization:
Unrecognized net transition asset			(26	)			(23	)			(72	)			(70	)
Unrecognized prior service (credit) cost			(303	)			(272	)			(849	)			(817	)
Unrecognized loss			210				222				579				653
One-time charge			—				—				358				—
Net periodic pension benefit cost		$	201			$	120			$	844			$	459

          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. As an offset to the decrease in RIP benefits, beginning with 2007, 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, the automatic contribution for substantially all new full-time employees was increased from two percent to four percent. The Corporation’s contribution expense was $3.1 million and $2.3 million for the nine months ended September 30, 2008 and 2007, 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 are 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								Nine Months Ended
		September 30,								September 30,
		2008				2007				2008				2007
Service cost		$	(3	)		$	15			$	27			$	42
Interest cost			32				34				89				100
Amortization:
Unrecognized prior service credit			—				(421	)			—				(1,262	)
Unrecognized loss			1				—				2				—
Net periodic postretirement benefit cost		$	30			$	(372	)		$	118			$	(1,120	)