425

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: July 26, 2007

(Date of earliest event reported)

VIRGINIA FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

VIRGINIA	000-22283	54-1829288
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

102 SOUTH MAIN STREET

CULPEPER, VIRGINIA 22701

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (540) 829-1633

n/a

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Merger Agreement

On July 26, 2007, Virginia Financial Group, Inc. (“VFG”) and FNB Corporation (“FNB”) entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) pursuant to which the two companies will combine in a merger of equals transaction (the “Merger”), creating the largest independent bank holding company headquartered in Virginia.

In the Merger Agreement, which was approved by the Boards of Directors of both companies, each of FNB and VFG has made customary representations, warranties and covenants. The completion of the Merger is subject to various closing conditions, including obtaining the approval of FNB’s and VFG’s shareholders and receiving certain regulatory approvals. The Merger is intended to qualify as a tax-free reorganization for federal income tax purposes.

At the effective date of the Merger (the “Effective Date”), FNB shareholders will receive 1.5850 shares of VFG common stock for each of their shares of FNB common stock outstanding immediately prior to the Effective Date, with each share of VFG common stock becoming one share of common stock of the resulting holding company. Each option to purchase a share of FNB common stock outstanding immediately prior to the Effective Date will be converted into an option to purchase shares of common stock of the resulting holding company, adjusted for the 1.5850 exchange ratio.

In the Merger, FNB and VFG will consolidate their banking subsidiaries into one state-chartered bank and both the resulting holding company and its banking subsidiary will be renamed. The resulting holding company will be headquartered in Charlottesville, Virginia, with its banking subsidiary and operations center headquartered in Christiansburg, Virginia. The resulting holding company will be governed by a Board of Directors of up to 24 directors, with equal representation from FNB and VFG. The banking subsidiary’s Board of Directors will also have equal representation from FNB and VFG. Current FNB President and Chief Executive Officer William P. Heath, Jr. will serve as Chairman of the Board for the resulting holding company. Current VFG President and Chief Executive Officer O. R. Barham, Jr. will serve as President and Chief Executive Officer for the resulting holding company. Gregory W. Feldmann, current FNB Chief Operating Officer and President and Chief Executive Officer of FNB’s subsidiary, First National Bank, will serve as President and Chief Executive Officer of the resulting banking subsidiary. Raymond D. Smoot, Jr., current Chairman of the Board of FNB’s First National Bank, will serve as Chairman of the Board of the resulting banking subsidiary. Current VFG Executive Vice President and Chief Operating Officer Litz Van Dyke will serve as Executive Vice President and Chief Operating Officer for the resulting holding company, and current VFG Executive Vice President and Chief Financial Officer Jeffrey W. Farrar will serve as Executive Vice President and Chief Financial Officer for the resulting holding company.

In the Merger Agreement, FNB and VFG have each agreed not to solicit proposals relating to alternative business combination transactions or, subject to certain exceptions, to enter into discussions or negotiations or provide confidential information in connection with any proposals for alternative business combination transactions.

In connection with entering into the Merger Agreement, FNB and VFG entered into separate reciprocal stock option agreements (the “Option Agreements”), pursuant to which each company granted to the other a stock option (an “Option”) to purchase up to 19.9% of its total outstanding common shares. Neither of the Options is currently exercisable and, pursuant to the terms of the Option Agreements, will only become exercisable upon the occurrence of certain events relating to a third party acquisition proposal relating to the issuer of the shares covered by the respective Option. Each company’s total realizable value under the Option it has been granted is subject to a cap of $11.750 million. Under certain circumstances, each of the companies may be required to repurchase for cash the applicable Option or the shares acquired pursuant to the exercise of such Option.

The foregoing description of the Merger, the Merger Agreement and the Option Agreements does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement and the Option Agreements, which are filed as Exhibits 2.1, 99.1 and 99.2, respectively, to this report and are incorporated herein by reference. The Merger Agreement and the Option Agreements have been included to provide information regarding the terms of the Merger. They are not intended to provide any other factual information about FNB or VFG.

As described above, the Merger Agreement contains representations and warranties that FNB and VFG made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Merger Agreement between FNB and VFG and may be subject to important qualifications and limitations agreed to by FNB and VFG in connection with negotiating its terms. Moreover, the representations and warranties are modified in important part by the underlying disclosure schedules which are not filed publicly, may be subject to a contractual standard of materiality that is different from what may be viewed as material to shareholders, and may have been used for the purpose of allocating risk between FNB and VFG rather than establishing matters as facts. For the foregoing reasons, you should not rely on the representations and warranties as accurate or complete or as characterizations of the actual state of facts as of any specified date.

Important Additional Information Will be Filed with the SEC

This communication is being made in respect of the proposed merger of FNB and VFG. In connection with the proposed merger, VFG plans to file with the SEC a registration statement on Form S-4 to register the shares of VFG common stock to be issued to the shareholders of FNB in the transaction. The registration statement will include a joint proxy statement/prospectus which will be mailed to the shareholders of VFG and FNB seeking their approval of the merger. In addition, each of VFG and FNB may file other relevant documents concerning the proposed merger with the SEC.

INVESTORS AND SECURITY HOLDERS OF FNB AND VFG ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT

AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT VFG, FNB AND THE PROPOSED TRANSACTION. Investors and security holders may obtain free copies of these documents (when available) through the website maintained by the SEC at http://www.sec.gov. Free copies of the joint proxy statement/prospectus (when available) also may be obtained by directing a request by telephone or mail to Virginia Financial Group, Inc., 1807 Seminole Trail, Suite 104, Charlottesville, Virginia 22901, Attention: Investor Relations (telephone: (434) 964-2217) or FNB Corporation, 105 Arbor Drive, P.O. Box 600, Christiansburg, Virginia 24068, Attention: Investor Relations (telephone: (540) 382-6042) or by accessing VFG’s website at http://www.vfgi.net under “SEC Filings and Other Documents” or FNB’s website at http://www.fnbonline.com under “Investor Relations/SEC Filings.” The information on VFG’s and FNB’s websites is not, and shall not be deemed to be, a part of this report or incorporated into other filings either company makes with the SEC.

VFG and FNB and their respective directors, executive officers and members of management may be deemed to be participants in the solicitation of proxies from the shareholders of VFG and/or FNB in connection with the merger. Information about the directors and executive officers of VFG is set forth in the proxy statement for VFG’s 2007 annual meeting of shareholders filed with the SEC on March 28, 2007. Information about the directors and executive officers of FNB is set forth in the proxy statement for FNB’s 2007 annual meeting of shareholders filed with the SEC on March 30, 2007. Additional information regarding these participants in the proxy solicitation and their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

Item 7.01. Regulation FD Disclosure.

A copy of an investor presentation, dated July 27, 2007, prepared jointly by Virginia Financial Group, Inc. and FNB Corporation in connection with the proposed merger is furnished as Exhibit 99.3 to this report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
2.1	Agreement and Plan of Reorganization, dated as of July 26, 2007, between Virginia Financial Group, Inc. and FNB Corporation
99.1	Stock Option Agreement, dated as of July 26, 2007, between Virginia Financial Group, Inc. (as issuer) and FNB Corporation (as grantee)
99.2	Stock Option Agreement, dated as of July 26, 2007, between FNB Corporation (as issuer) and Virginia Financial Group, Inc. (as grantee)
99.3	Investor presentation prepared jointly by Virginia Financial Group, Inc. and FNB Corporation, dated July 27, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Virginia Financial Group, Inc.
By:	/s/ Jeffrey W. Farrar
	Jeffrey W. Farrar
	Executive Vice President and Chief Financial Officer

Date: July 27, 2007

EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Reorganization, dated as of July 26, 2007, between Virginia Financial Group, Inc. and FNB Corporation
99.1	Stock Option Agreement, dated as of July 26, 2007, between Virginia Financial Group, Inc. (as issuer) and FNB Corporation (as grantee)
99.2	Stock Option Agreement, dated as of July 26, 2007, between FNB Corporation (as issuer) and Virginia Financial Group, Inc. (as grantee)
99.3	Investor presentation prepared jointly by Virginia Financial Group, Inc. and FNB Corporation, dated July 27, 2007

EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF REORGANIZATION

between

VIRGINIA FINANCIAL GROUP, INC.

and

FNB CORPORATION

July 26, 2007

TABLE OF CONTENTS

		Page
ARTICLE 1.	THE MERGER AND RELATED MATTERS	1
1.1	The Merger	1
1.2	Effective Date	1
1.3	Corporate Governance and Related Matters	1
1.4	Consolidation of Banking and Trust Operations	2
1.5	Articles of Incorporation and Bylaws of the Continuing Corporation	3
ARTICLE 2.	MERGER CONSIDERATION; EXCHANGE PROCEDURES	3
2.1	Conversion of Shares	3
2.2	Exchange Procedures	4
2.3	No Fractional Shares	5
2.4	Dividends	5
2.5	FNB Stock Options and Other Equity-Based Awards	5
ARTICLE 3.	REPRESENTATIONS AND WARRANTIES	6
3.1	Disclosure Letters	6
3.2	Standard	7
3.3	Representations and Warranties	7
ARTICLE 4.	COVENANTS RELATING TO CONDUCT OF BUSINESS	14
4.1	Conduct of Business Pending Merger	14
4.2	Dividends	16
4.3	Transition	16
4.4	Control of the Other Party’s Business	16
ARTICLE 5.	ADDITIONAL AGREEMENTS	16
5.1	Reasonable Best Efforts	16
5.2	Access to Information; Notice of Certain Matters; Confidentiality	17
5.3	Stockholder Approvals.	17
5.4	Registration Statement; Joint Proxy Statement; SEC Filings	17
5.5	No Other Acquisition Proposals	18
5.6	Applications and Consents	19
5.7	Public Announcements	19
5.8	Affiliate Agreements	20
5.9	Employee Benefit Plans	20
5.10	Nasdaq Listing	21
5.11	Indemnification	21
5.12	Employment Arrangements	21
5.13	Takeover Laws	21
5.14	Change of Method	21
ARTICLE 6.	CONDITIONS TO THE MERGER	22
6.1	General Conditions	22
6.2	Conditions to Obligations of VFG	22
6.3	Conditions to Obligations of FNB	23
ARTICLE 7.	TERMINATION	23
7.1	Termination	23
7.2	Effect of Termination	24
7.3	Non-Survival of Representations, Warranties and Covenants	24
7.4	Fees and Expenses	24

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		Page
ARTICLE 8.	GENERAL PROVISIONS	24
8.1	Entire Agreement	24
8.2	Binding Effect; No Third Party Rights	25
8.3	Waiver and Amendment	25
8.4	Governing Law	25
8.5	Notices	25
8.6	Counterparts	26
8.7	Waiver of Jury Trial	26
8.8	Severability	26

LIST OF EXHIBITS

EXHIBIT 1.1(a)	Plan of Merger
EXHIBIT 1.1(b)	Stock Option Agreement for VFG
EXHIBIT 1.1(c)	Stock Option Agreement for FNB
EXHIBIT 1.3(b)	Form of Bylaw Amendment of the Continuing Corporation
EXHIBIT 5.8	Form of Affiliate Agreement
EXHIBIT 5.12	Form of Employment Agreements

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INDEX OF DEFINED TERMS

Acquisition Transaction	Section 5.5(b)
Available FNB Stock Plan Shares	Section 2.5(e)
Bank Merger	Section 1.4(a)
Bank Reports	Section 3.3(f)(iii)
Benefit Plans	Section 3.3(m)(i)
Closing Date	Section 1.2
Code	Recitals
Continuing Bank	Section 1.4(a)
Continuing Corporation	Section 1.1
Continuing Corporation Common Stock	Section 2.1(a)
Continuing Corporation Stock Award	Section 2.5(c)
Continuing Corporation Stock Option	Section 2.5(a)
Disclosure Letter	Section 3.1(a)
Effective Date	Section 1.2
Environmental Laws	Section 3.3(p)(v)
Environmental Claim	Section 3.3(p)(v)
ERISA	Section 3.3(m)(ii)
Exchange Agent	Section 2.2(a)
Exchange Fund	Section 2.2(a)
Exchange Ratio	Section 2.1(a)
GAAP	Section 3.3(f)(ii)
Governmental Authority	Section 5.6(a)
VFG Affiliates	Section 5.8
VFG Common Stock	Section 2.1(c)
VFG Directors	Section 1.3(b)
VFG DRP	Section 3.3(d)
VFG Option Agreement	Recitals
VFG Stock Award	Section 3.3(d)
VFG Stock Option	Section 3.3(d)
VFG Stock Plan	Section 3.3(d)
VFG Stockholder Approval	Section 3.3(c)(i)
Intellectual Property	Section 3.3(r)
Joint Proxy Statement	Section 5.4(a)
Knowledge	Section 3.2(c)
FNB Affiliates	Section 5.8
FNB Common Stock	Section 2.1(a)
FNB Continuing Employees	Section 5.9(a)
FNB Directors	Section 1.3(b)
FNB DRP	Section 3.3(e)
FNB Option Agreement	Recitals
FNB Stock Award	Section 2.5(c)
FNB Stock Option	Section 2.5(a)
FNB Stock Plan	Section 2.5(a)
FNB Stockholder Approval	Section 3.3(c)(i)
Material Adverse Effect	Section 3.2(b)
Materials of Environmental Concern	Section 3.3(p)(v)
Merger	Recitals
New Certificates	Section 2.2(a)
Old VFG Certificates	Section 2.2(c)
Old FNB Certificates	Section 2.1(b)

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Organizational Documents	Section 3.3(a)
Plan of Merger	Section 1.1
Registration Statement	Section 5.4(a)
Regulatory Approvals	Section 5.6(a)
Rights	Section 3.3(d)
SCC	Section 1.2
SEC	Section 3.3(f)
SEC Reports	Section 3.3(f)
Securities Act	Section 5.4(a)
Securities Laws	Section 3.3(f)
Superior Proposal	Section 5.5(c)
Stock Option Agreements	Recitals
Subsidiary	Section 3.3(b)
Takeover Laws	Section 3.3(s)
Takeover Provisions	Section 3.3(s)
Tax Returns	Section 3.3(k)
Taxes	Section 3.3(k)
Technology Systems	Section 3.3(r)
VSCA	Section 1.1

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AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made and entered into as of July 26, 2007, between VIRGINIA FINANCIAL GROUP, INC., a Virginia corporation (“VFG”), and FNB CORPORATION, a Virginia corporation (“FNB”).

WHEREAS, the Boards of Directors of VFG and FNB have approved, and deem it advisable and in the best interests of their respective stockholders to consummate, the business combination transaction provided for herein in which VFG and FNB will affiliate in a merger of equals transaction (the “Merger”);

WHEREAS, the Boards of Directors of VFG and FNB have each determined that the Merger and the other transactions contemplated hereby are consistent with, and will further, their respective business strategies and goals;

WHEREAS, as an inducement and condition to VFG entering into this Agreement, FNB is granting to VFG an option pursuant to a stock option agreement in the form set forth in Exhibit 1.1(b) (the “VFG Option Agreement). As an inducement and condition to FNB entering into this Agreement, VFG is granting to FNB an option pursuant to a stock option agreement in the form set forth in Exhibit 1.1(c) (the “FNB Option Agreement” and, together with the VFG Option Agreement, the “Stock Option Agreements”); and

WHEREAS, it is the intention of the parties that, for federal income tax purposes, the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement shall constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE 1

The Merger and Related Matters

1.1 The Merger.

Subject to the terms and conditions of this Agreement, at the Effective Date as defined in Section 1.2, FNB will be merged with and into VFG pursuant to the Plan of Merger attached hereto as Exhibit 1.1(a) and made a part hereof (the “Plan of Merger”). VFG will be the surviving corporation in the Merger (referred to herein as the “Continuing Corporation” whenever reference is made to it as of the Effective Date or thereafter). The Merger will have the effect set forth in Section 13.1-721 of the Virginia Stock Corporation Act (the “VSCA”).

1.2 Effective Date.

The Merger will become effective on the date and at the time shown on the Certificate of Merger issued by the Virginia State Corporation Commission (the “SCC”) effecting the Merger (the “Effective Date”). Subject to the satisfaction or waiver of the conditions set forth in Article 6, the parties will use their reasonable best efforts to cause the Effective Date to occur on or before January 1, 2008, or on such other date as the parties may agree in writing. All documents required by this Agreement to be delivered at or before the Effective Date will be exchanged by the parties at the closing date of the Merger (the “Closing Date”), which shall be held on or before the Effective Date. At or after the Closing Date, VFG and FNB will execute and deliver Articles of Merger containing the Plan of Merger to the SCC.

1.3 Corporate Governance and Related Matters.

(a) Prior to the Effective Date, the name of the Continuing Corporation will be selected by the mutual agreement of VFG and FNB.

(b) Prior to the Effective Date, VFG shall take all actions necessary to adopt the amendment to the Bylaws of VFG substantially in the form set forth in Exhibit 1.3(b), effective as of the Effective Date. On or prior to the Effective Date, the Board of Directors of VFG shall cause the number of directors that will comprise the full Board of Directors of the Continuing Corporation at the Effective Date to be fixed at such number, not to exceed twenty-four, as agreed to by the parties. Of the members of the initial Board of Directors of the Continuing Corporation at the Effective Date, not more than twelve shall be current VFG directors designated by VFG, including the current President and Chief Executive Officer of VFG (the “VFG Directors”), and not more than twelve shall be current FNB directors designated by FNB, including the current President and Chief Executive Officer of FNB (the “FNB Directors”); it being understood and agreed that the Board of Directors shall be split evenly between VFG and FNB Directors until at least the third anniversary of the Effective Date. No other directors or employees of VFG or FNB shall be designated to serve on the Board of Directors of the Continuing Corporation at the Effective Date. The VFG Directors and FNB Directors will be split as equally as possible among the three classes of directors to serve staggered terms.

(c) Prior to the Effective Date, the VFG Board of Directors will take such actions as are necessary to cause the following persons to be elected or appointed to the following offices of the Continuing Corporation as of the Effective Date:

William P. Heath, Jr.	Chairman of the Board of Directors
O. R. Barham, Jr.	President and Chief Executive Officer
Litz H. Van Dyke	Executive Vice President and Chief Operating Officer
Jeffrey W. Farrar	Executive Vice President and Chief Financial Officer

(d) The headquarters of the Continuing Corporation will be located in Charlottesville, Virginia.

(e) The operations center of the Continuing Corporation will be located in Christiansburg, Virginia.

1.4 Consolidation of Banking and Trust Operations.

(a) At the Effective Date or as soon thereafter as reasonably practicable, First National Bank, a wholly-owned national banking subsidiary of FNB, Planters Bank & Trust Company of Virginia, a wholly-owned Virginia chartered banking subsidiary of VFG and Second Bank & Trust, a wholly-owned Virginia chartered banking subsidiary of VFG, will be merged together (the “Bank Merger”) in a manner determined by the Continuing Corporation and with Second Bank & Trust as the surviving bank in the Bank Merger (referred to herein as the “Continuing Bank” whenever reference is made to it as of the effective date of the Bank Merger or thereafter).

(b) Prior to the Effective Date, the name of the Continuing Bank will selected by the mutual agreement of VFG and FNB.

(c) On or prior to the effective date of the Bank Merger, the Board of Directors of Second Bank & Trust shall cause the number of directors that will comprise the full Board of Directors of the Continuing Bank at the effective date of the Bank Merger to be fixed at the number of directors determined by VFG and FNB, with VFG and FNB each designating an equal number of directors to serve on the Board of Directors of the Continuing Bank.

(d) Prior to the effective date of the Bank Merger, the Board of Directors of Second Bank & Trust will take such actions as are necessary to cause the following persons to be elected or appointed to the following offices of the Continuing Bank as of the effective date of the Bank Merger:

Raymond D. Smoot, Jr.	Chairman of the Board of Directors
Gregory W. Feldmann	President and Chief Executive Officer

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(e) The headquarters and operations center of the Continuing Bank will be located in Christiansburg, Virginia, and at the effective date of the Bank Merger the Continuing Bank will have four banking regions, each with a separate officer in charge.

(f) As soon as practicable after the Effective Date, the Continuing Corporation and the Continuing Bank will take all appropriate action necessary: (i) to consolidate the trust operations of First National Bank and Virginia Commonwealth Trust Company into either the trust division of the Continuing Bank or Virginia Commonwealth Trust Company, as determined prior to the Effective Date by VFG and FNB; (ii) to change the name of the new trust division or company to a new name selected by mutual agreement of VFG and FNB; and (iii) to appoint the officers and directors of the new trust division or company.

1.5 Articles of Incorporation and Bylaws of the Continuing Corporation.

The Articles of Incorporation and Bylaws of the Continuing Corporation as in effect immediately prior to the Effective Date, as such Articles of Incorporation are proposed to be amended to change the name of the Continuing Corporation as set forth in Section 1.3(a) and as such Bylaws are to be amended as set forth in Exhibit 1.3(b), will be the Articles of Incorporation and Bylaws of the Continuing Corporation.

ARTICLE 2

Merger Consideration; Exchange Procedures

2.1 Conversion of Shares.

At the Effective Date, by virtue of the Merger and without any action on the part of VFG or FNB or their respective stockholders:

(a) Each share of common stock, par value $5.00 per share, of FNB (“FNB Common Stock”) issued and outstanding immediately before the Effective Date will be converted into and exchanged for 1.585 fully paid and nonassessable shares of common stock, par value $1.00 per share, of the Continuing Corporation (“Continuing Corporation Common Stock”) pursuant to the terms and conditions set forth in this Agreement and the Plan of Merger (the “Exchange Ratio”).

(b) All shares of FNB Common Stock converted pursuant to this Section 2.1 shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist as of the Effective Date. Each certificate previously representing any such shares (the “Old FNB Certificates”) shall cease to represent any rights except the right to receive with respect to each underlying share of FNB Common Stock (i) a new certificate representing the number of whole shares of Continuing Corporation Common Stock into which the shares of FNB Common Stock represented by the Old FNB Certificate have been converted pursuant to this Section 2.1 upon the surrender of such Old FNB Certificate in accordance with Section 2.2, (ii) in accordance with Section 2.3, cash in lieu of fractional shares of Continuing Corporation Common Stock; and (iii) any dividends or distributions which the holder thereof has the right to receive pursuant to Section 2.4.

(c) Each share of common stock, par value $1.00 per share, of VFG (“VFG Common Stock”) issued and outstanding immediately before the Effective Date shall remain an issued and outstanding share of Continuing Corporation Common Stock. Each certificate previously representing shares of VFG Common Stock shall continue to represent an equal number of shares of Continuing Corporation Common Stock on and after the Effective Date.

(d) In the event VFG or FNB changes (or establishes a record date for changing) the number of shares of its common stock issued and outstanding before the Effective Date as a result of a stock split, stock dividend, recapitalization, reclassification, reorganization or similar transaction with respect to its

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outstanding common stock, and the record date therefor shall be before the Effective Date, appropriate and proportional adjustments will be made to the Exchange Ratio.

(e) Each share of FNB Common Stock held by either party and each share of VFG Common Stock held by FNB or its Subsidiaries prior to the Effective Date (in each case other than in a fiduciary or agency capacity or on behalf of third parties as a result of debts previously contracted) shall be cancelled and retired and shall cease to exist at the Effective Date and no consideration shall be issued in exchange therefor; provided, that such shares of VFG Common Stock shall resume the status of authorized and unissued shares of Continuing Corporation Common Stock.

2.2 Exchange Procedures.

(a) At the Effective Date, the Continuing Corporation shall deposit, or shall cause to be deposited, with its transfer agent or such other transfer agent or depository or trust institution of recognized standing approved by VFG and FNB (in such capacity, the “Exchange Agent”), for the benefit of the holders of the Old FNB Certificates, certificates representing Continuing Corporation Common Stock (“New Certificates”), together with any dividends or distributions with respect thereto and any cash to be paid hereunder in lieu of fractional shares of Continuing Corporation Common Stock, without any interest thereon (the “Exchange Fund”), to be paid pursuant to Article 1 and this Article 2 in exchange for outstanding shares of FNB Common Stock.

(b) As promptly as practicable after the Effective Date, the Continuing Corporation shall cause the Exchange Agent to send to each former stockholder of record of FNB immediately before the Effective Date transmittal materials for use in exchanging such stockholder’s Old FNB Certificates for New Certificates based upon the Exchange Ratio.

(c) At its election, the Continuing Corporation may, but shall not be required to, cause the Exchange Agent to send to each stockholder of record of VFG immediately before the Effective Date transmittal materials for use in exchanging such stockholder’s certificates representing shares of VFG Common Stock (“Old VFG Certificates”) for New Certificates representing an equal number of shares of Continuing Corporation Common Stock. If the Continuing Corporation elects to require the surrender of the Old VFG Certificates, it shall comply with Section 2.2(a) above with respect to, and for the benefit of, the holders of the Old VFG Certificates.

(d) The Continuing Corporation shall cause the New Certificates for shares of Continuing Corporation Common Stock into which shares of FNB Common Stock and VFG Common Stock, to the extent the Continuing Corporation elects to require that Old VFG Certificates be surrendered and exchanged for New Certificates pursuant to Section 2.2(c) above, are converted at the Effective Date or dividends or distributions which such stockholder shall be entitled to receive and any cash to be paid in lieu of fractional shares to be paid to such stockholder upon delivery to the Exchange Agent of Old FNB Certificates and Old VFG Certificates representing such shares of FNB and VFG, together with the transmittal materials duly executed and completed in accordance with the instructions thereto. No interest will accrue or be paid on any such cash to be paid pursuant to Section 2.3.

(e) Any portion of the Exchange Fund that remains unclaimed by the stockholders of FNB and VFG, to the extent the Continuing Corporation elects to require that Old VFG Certificates be surrendered and exchanged for New Certificates pursuant to Section 2.2(c) above, for six months after the Effective Date shall be returned to the Continuing Corporation (together with any dividends or earnings in respect thereof). Any stockholders of FNB and VFG, if applicable, who have not complied with this Article 2 shall thereafter be entitled to look only to the Continuing Corporation, and only as a general creditor thereof, for payment of the consideration deliverable in respect of each share of FNB Common Stock and VFG Common Stock such stockholder holds as determined pursuant to this Agreement, without any interest thereon.

(f) None of the Exchange Agent, any of the parties hereto or any of their respective Subsidiaries shall be liable to any stockholder of FNB or VFG for any amount of property delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

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2.3 No Fractional Shares.

Each holder of shares of FNB Common Stock exchanged pursuant to the Merger which would otherwise have been entitled to receive a fraction of a share of Continuing Corporation Common Stock (after taking into account all Old FNB Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest and rounded to the nearest cent) in an amount equal to such fractional part of a share of Continuing Corporation Common Stock multiplied by the closing sale price of VFG Common Stock on the Nasdaq Global Select Market on the trading day immediately preceding the Effective Date.

2.4 Dividends.

No dividend or other distribution payable to the holders of record of FNB Common Stock or VFG Common Stock, to the extent the Continuing Corporation elects to require that Old VFG Certificates be surrendered and exchanged for New Certificates pursuant to Section 2.2(c) above, at, or as of, any time after the Effective Date will be paid to the holder of any Old FNB Certificates or Old VFG Certificates, if applicable, until such holder physically surrenders such certificate (or customary indemnity if any of such certificate is lost, stolen or destroyed) for exchange as provided in Section 2.2 of this Agreement, promptly after which time all such dividends or distributions will be paid (without interest).

2.5 FNB Stock Options and Other Equity-Based Awards.

(a) Each option to purchase shares of FNB Common Stock (a “FNB Stock Option”) granted under an equity or equity-based compensation plan of FNB (a “FNB Stock Plan”), whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Date shall cease, at the Effective Date, to represent a right to acquire FNB Common Stock and shall be converted at the Effective Date, without any action on the part of the holder thereof, into an option to purchase shares of Continuing Corporation Common Stock (a “Continuing Corporation Stock Option”) on the same terms and conditions as were applicable under such FNB Stock Option (but taking into account any changes thereto, including any acceleration thereof, provided for in the relevant FNB Stock Plan or in the related award document by reason of the Merger).

(b) The number of shares of Continuing Corporation Common Stock subject to each such Continuing Corporation Stock Option shall be equal to the number of shares of FNB Common Stock subject to each such FNB Stock Option multiplied by the Exchange Ratio, rounded, if necessary, to the nearest whole share of Continuing Corporation Common Stock, and such Continuing Corporation Stock Option shall have an exercise price per share (rounded to the nearest cent) equal to the per share exercise price specified in such FNB Stock Option divided by the Exchange Ratio; provided that the exercise price, the number of shares of Continuing Corporation Common Stock subject to such option and the terms and conditions of exercise of each such option (after taking into account the effect of any accelerated vesting thereof, if applicable) shall be determined in a manner consistent with the requirements of Section 424(a) of the Code.

(c) Each restricted stock award granted under a FNB Stock Plan (a “FNB Stock Award”) which is unvested or contingent and outstanding immediately prior to the Effective Date, shall cease, at the Effective Date, to represent any rights with respect to shares of FNB Common Stock and shall be converted without any action on the part of the holder thereof, into a restricted stock award of the Continuing Corporation (a “Continuing Corporation Stock Award”), on the same terms and conditions as were applicable under the FNB Stock Awards (but taking into account any changes thereto, including any acceleration thereof, provided for in the FNB Stock Plan or in the related award document by reason of the Merger). The number of shares of Continuing Corporation Common Stock subject to each such Continuing Corporation Stock Award shall be equal to the number of shares of FNB Common Stock subject to the FNB Stock Award multiplied by the Exchange Ratio, rounded, if necessary, to the nearest whole share of Continuing Corporation Common Stock.

(d) As soon as practicable after the Effective Date, the Continuing Corporation will deliver to the holders of FNB Stock Options and FNB Stock Awards any required notices setting forth such holders’ rights pursuant to the

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FNB Stock Plan and award documents and stating that such FNB Stock Options and FNB Stock Awards have been assumed by the Continuing Corporation and shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 2.5 after giving effect to the Merger and the terms of the FNB Stock Plan).

(e) Following the Effective Date, the Continuing Corporation may maintain the FNB Stock Plan for purposes of granting future awards. The provisions of the FNB Stock Plan will be unchanged, except that (i) all stock options and other equity-based awards issued by the Continuing Corporation pursuant to the FNB Stock Plan following the Effective Date shall be stock options and equity-based awards in respect of Continuing Corporation Common Stock, (ii) all references to FNB (other than any references relating to a “change in control” of FNB) in the FNB Stock Plan and in each agreement evidencing any award thereunder shall be deemed to refer to the Continuing Corporation, unless the Continuing Corporation determines otherwise, and (iii) the number of shares of Continuing Corporation Common Stock available for future issuance pursuant to the FNB Stock Plan following the Effective Date (the “Available FNB Stock Plan Shares”) shall be equal to the number of shares of FNB Common Stock so available immediately prior to the Effective Date multiplied by the Exchange Ratio, rounded, if necessary, down to the nearest whole share of Continuing Corporation Common Stock.

(f) The Continuing Corporation shall reserve for future issuance a sufficient number of shares of Continuing Corporation Common Stock for delivery upon exercise of the FNB Stock Options assumed by it in accordance with this Section 2.5, plus the number of Available FNB Stock Plan Shares in the event the Continuing Corporation maintains the FNB Stock Plan as contemplated by Section 2.5(e). As soon as practicable after the Effective Date, the Continuing Corporation will file a registration statement on Form S-8 (or other appropriate form) with respect to the shares of FNB Common Stock subject to such Continuing Corporation Stock Options and Continuing Corporation Stock Awards (and the Available FNB Stock Plan Shares), as the case dictates) and shall maintain the effectiveness of such registration statement (and the current status of the prospectus contained therein) for so long as such Continuing Corporation Stock Options remain outstanding.

ARTICLE 3

Representations and Warranties

3.1 Disclosure Letters.

(a) Prior to the execution and delivery of this Agreement, each party has delivered to the other party a letter (its “Disclosure Letter”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more of such party’s representations or warranties contained in Section 3.3 or to one or more of its covenants contained in Article 4; provided, (i) no such item is required to be set forth in a party’s Disclosure Letter as an exception to any representation or warranty of such party if its absence would not result in the related representation or warranty being deemed untrue or incorrect under the standard established by Section 3.2, and (ii) the mere inclusion of an item in a party’s Disclosure Letter as an exception to a representation or warranty shall not be deemed an admission by that party that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect (as defined below) with respect to such party.

(b) Any disclosures made with respect to a subsection of Section 3.3 shall be deemed to qualify (i) any subsections of Section 3.3 specifically referenced or cross-referenced and (ii) other subsections of Section 3.3 to the extent it is clear (notwithstanding the absence of a specific cross reference) from a reading of the disclosure that such disclosure (A) applies to such other subsections and (B) contains sufficient detail to enable a reasonable person to recognize the relevance of such disclosure to such other subsections.

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3.2 Standard.

(a) No representation or warranty of VFG or FNB contained in Section 3.3 (other than the representations and warranties contained in (i) Sections 3.3(c)(i) and (ii), 3.3(d), 3.3(e) and 3.3(u), which shall be true in all material respects with respect to it, and (ii) Sections 3.3(c)(iii)(A) and 3.3(g)(ii) which shall be true and correct in all respects) will be deemed untrue or incorrect, and no party will be deemed to have breached a representation or warranty, as a consequence of the existence or absence of any fact, event or circumstance unless such fact, event or circumstance, individually or taken together with all other facts, events or circumstances inconsistent with any representation or warranty contained in Section 3.3 has had or is reasonably likely to have a Material Adverse Effect on such party.

(b) The term “Material Adverse Effect,” as used with respect to a party, means an event, change, effect or occurrence which, individually or together with any other event, change, effect or occurrence, (i) is materially adverse to the business, properties, financial condition or results of operations of such party and its Subsidiaries (as defined in Section 3.3(b)), taken as a whole, or (ii) materially impairs the ability of such party to perform its obligations under this Agreement or to consummate the Merger and the other transactions contemplated by this Agreement on a timely basis; provided that, in determining whether a Material Adverse Effect has occurred, there shall be excluded any effect to the extent attributable to or resulting from (A) changes in laws or regulations generally affecting the banking and bank holding company businesses and the interpretation of such laws and regulations by courts or governmental authorities, (B) changes in generally accepted accounting principles or regulatory accounting requirements generally affecting the banking and bank holding company businesses, (C) changes or events generally affecting the banking and bank holding company businesses, including changes in prevailing interest rates, and not specifically relating to VFG or FNB or their respective Subsidiaries, (D) the effects of the actions expressly permitted or required by this Agreement or that are taken with the prior informed consent of the other party in contemplation of the transactions contemplated hereby, (E) the announcement of this Agreement and the transactions contemplated hereby, and (F) any outbreak of major hostilities in which the United States is involved or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories or diplomatic or consular offices or upon any military installation or personnel of the United States.

(c) The term “Knowledge” when used with respect to a party means the Knowledge, after due inquiry, of such party’s executive officers.

3.3 Representations and Warranties.

Subject to and giving effect to Sections 3.1 and 3.2 and except as set forth in the relevant Disclosure Letters, VFG hereby represents and warrants to FNB and FNB hereby represents and warrants to VFG as follows:

(a) Organization, Standing and Power. It is a Virginia corporation duly organized, validly existing and in good standing under the laws of Virginia. It has the corporate power and authority to carry on its business as now conducted and to own and operate its assets, properties and business. It is duly registered as a bank holding company under the Bank Holding Company Act of 1956. True and complete copies of its articles of incorporation, bylaws or other similar governing instruments (the “Organizational Documents”), in each case as amended to the date hereof and as in full force and effect as of the date hereof, are set forth in Section 3.3(a) of its Disclosure Letter.

(b) Subsidiaries. Each of its Subsidiaries (i) is a duly organized corporation, validly existing and in good standing under applicable laws, (ii) has full corporate power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business in the states where its ownership or leasing of property or the conduct of its business requires such qualification and where the failure to so qualify would have a Material Adverse Effect on it on a consolidated basis. The outstanding shares of capital stock of each of its Subsidiaries are validly issued and outstanding, fully paid and nonassessable and all such shares are directly or indirectly owned by it free and clear of all liens, claims and encumbrances or preemptive rights

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of any person. A true and complete list of its direct and indirect Subsidiaries as of the date hereof is set forth in Section 3.3(b) of its Disclosure Letter.

The term “Subsidiary” when used with respect to any party means any corporation or other business organization, whether incorporated or unincorporated, at least a majority of the securities or other interests of which that have by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries.

(c) Authority; No Breach of the Agreement.

(i) It has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Stock Option Agreements, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Stock Option Agreements, and the consummation of the transactions contemplated hereby and thereby, by it have been duly and validly authorized by all necessary corporate action, subject only to the receipt of (A) in the case of FNB, the approval of this Agreement and the Plan of Merger by the holders of a majority of the outstanding shares of FNB Common Stock (the “FNB Stockholder Approval”), and (B) in the case of VFG, approval of this Agreement and the Plan of Merger by a majority of the outstanding shares of VFG Common Stock (the “VFG Stockholder Approval”). This Agreement and the Stock Option Agreements are its valid and legally binding obligations, enforceable in accordance with their respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting the enforcement of rights of creditors or by general principles of equity). The Continuing Corporation Common Stock to be issued in the Merger, when issued, will be validly issued, fully paid and nonassessable.

(ii) The amendment to the VFG Bylaws as described in Section 1.3 has been duly and validly authorized by all necessary corporate action (including valid authorization and adoption of a resolution, not to be withdrawn, providing for such VFG Bylaw amendment contingent on the Effective Date.

(iii) Neither the execution and delivery of this Agreement nor the Stock Option Agreements by it, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with any of the provisions hereof or thereof will: (A) conflict with or result in a breach of any provision of its Organizational Documents; (B) constitute or result in the breach of any term, condition or provision of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation of any lien, charge or encumbrance upon, any property or asset of it or any of its Subsidiaries pursuant to any (1) note, bond, mortgage, indenture, or (2) any material license, agreement or other instrument or obligation, to which it or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of their properties or assets may be bound; or (C) subject to the receipt of all required regulatory and stockholder approvals, violate any order, writ, injunction, decree, statute, rule or regulation applicable to it or any of its Subsidiaries.

(iv) As of the date hereof, it is not aware of any reason why the necessary regulatory approvals and consents will not be received in order to permit consummation of the Merger.

(d) VFG Capital Stock. The authorized capital stock of VFG consists of: (i) 1,000,000 shares of preferred stock, no par value per share, of which none are issued and outstanding; and (ii) 25,000,000 shares of common stock, par value $1.00 per share, of which 10,792,797 shares are issued and outstanding as of this date. All outstanding shares of VFG Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have not been issued in violation of the preemptive rights of any person. As of the date hereof, 246,321 shares of VFG Common Stock were subject to options to purchase VFG Common Stock (“VFG Stock Options”) and 29,750 shares were subject to unvested restricted stock awards (“VFG Stock Awards”), in each case granted under the 2001 Stock Incentive Plan (the “VFG Stock Plan”). As of the date of this Agreement, there are not any shares of capital stock of VFG reserved for issuance, or any outstanding or authorized options, warrants, rights, agreements, convertible or exchangeable securities,

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or other commitments, contingent or otherwise, relating to its capital stock pursuant to which VFG is or may become obligated to issue shares of capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of its capital stock (collectively, “Rights”), except as contemplated by the VFG Stock Plan and the VFG Stock Purchase and Dividend Reinvestment Plan (the “VFG DRP”) and as set forth in its Disclosure Letter (which includes copies of the VFG Stock Plan and individual stock award agreements thereunder).

(e) FNB Capital Stock. The authorized capital stock of FNB consists of 25,000,000 shares of common stock, par value $5.00 per share, of which 7,379,858 shares are issued and outstanding as of this date. All outstanding shares of FNB Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have not been issued in violation of the preemptive rights of any person. As of the date hereof, 229,690 shares of FNB Common Stock were subject to FNB Stock Options and 13,065 shares were subject to unvested FNB Stock Awards, in each case granted under the FNB Stock Plan. As of the date of this Agreement, there are not any shares of capital stock of FNB reserved for issuance, or any outstanding or authorized Rights, except as contemplated by the FNB Stock Plan and the FNB Dividend Reinvestment and Stock Purchase Plan (the “FNB DRP”) and as set forth in its Disclosure Letter (which includes copies of the stock incentive plans and individual stock award agreements).

(f) SEC Filings; Financial Statements; Bank Reports; Sarbanes-Oxley.

(i) Each party has filed and made available to the other party all reports, registration statements, proxy statements, offering circulars, schedules and other documents required to be filed by it with the Securities and Exchange Commission (the “SEC”) since December 31, 2003 (collectively, the “SEC Reports”) under the Securities Act of 1933 and the Securities Exchange Act of 1934 (collectively, the “Securities Laws”). Its SEC Reports, including the financial statements, exhibits and schedules contained therein, (A) at the time filed, complied (and any SEC Reports filed after the date of this Agreement will comply) in all material respects with the applicable requirements of the Securities Laws, and (B) at the time they were filed (or if amended or superseded by another SEC Report filed prior to the date of this Agreement, then on the date of such filing), did not (and any SEC Reports filed after the date of this Agreement will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such SEC Reports or necessary in order to make the statements made in such SEC Reports, in light of the circumstances under which they were made, not misleading.

(ii) Each of its financial statements contained in its SEC Reports (including any SEC Reports filed after the date of this Agreement) complied (or, in the case of SEC Reports filed after the date of this Agreement, will comply) in all material respects with the applicable requirements of the Securities Laws with respect thereto, fairly presented (or, in the case of SEC Reports filed after the date of this Agreement, will fairly present) the consolidated financial position of it and its Subsidiaries as at the respective dates and the consolidated results of its operations and cash flows for the periods indicated, in each case in accordance with generally accepted accounting principles (“GAAP”) consistently applied during the periods indicated, except in each case as may be noted therein, and subject to normal year-end audit adjustments and as permitted by Form 10-Q in the case of unaudited financial statements.

(iii) Since December 31, 2003, each of its Subsidiaries that is a bank has filed with its principal federal regulator and made available to the other party such bank’s Consolidated Reports of Condition and Income, and such reports fairly present the financial position, the results of operations, changes in stockholders’ equity and changes in cash flows, as the case may be, of such bank for the periods to which they relate, in each case in accordance with FFIEC instructions applicable to such reports (“Bank Reports”).

(iv) Each party is in compliance with the provisions of the Sarbanes-Oxley Act, including but not limited to Section 404 of such act, and the certifications provided and to be provided pursuant to Section 302 and 906 thereof are accurate. Each party and its Subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) all material

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transactions are executed in accordance with general or specific authorization of its Board of Directors and the duly authorized executive officers of such party, (ii) all material transactions are recorded as necessary to permit the preparation of financial statements in conformity with generally accepted accounting principles consistently applied with respect to institutions such as such party or other criteria applicable to such financial statements, and to maintain proper accountability for items therein, (iii) control of material properties and assets of such party is permitted only in accordance with general or specific authorization of its Board of Directors and the duly authorized executive officers of such party, and (iv) the recorded accountability for items is compared with the actual levels at reasonable intervals and appropriate actions taken with respect to any differences.

(g) Absence of Certain Changes or Events. Since December 31, 2006, except as disclosed in its SEC Reports or Bank Reports filed prior to the date of this Agreement, (i) it and its Subsidiaries have conducted their respective businesses and incurred liabilities only in the ordinary course consistent with past practices, and (ii) there have been no events, changes, developments or occurrences which, individually or in the aggregate, have had or are reasonably likely to have a Material Adverse Effect on it.

(h) Absence of Undisclosed Liabilities. Except for (i) those liabilities that are fully reflected or reserved for in its financial statements contained in its SEC Reports or Bank Reports filed prior to the date of this Agreement, (ii) liabilities incurred since March 31, 2007 in the ordinary course of business consistent with past practice, and (iii) liabilities which would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect, it does not have, and since March 31, 2007 has not incurred (except as permitted by Section 4.1), any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise and whether or not required to be reflected in its financial statements contained in its SEC Reports).

(i) Material Contracts; Defaults. Except for contracts and instruments reflected as exhibits to its SEC Reports filed prior to the date of this Agreement, as of the date hereof, neither it nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral) (A) that is a “material contract” required to be filed as an exhibit pursuant to Item 601(b)(10) of the SEC’s Regulation S-K, (B) that restricts the conduct of business by it or any of its Subsidiaries or its or their ability to compete in any line of business or (C) with respect to employment of an officer, director or consultant. Neither it nor any of its Subsidiaries is in default under any material contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its respective assets, business, or operations may be bound or affected, or under which it or its respective assets, business, or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default.

(j) Legal Proceedings; Compliance with Laws. Except as set forth in its Disclosure Schedule, there are no actions, suits or proceedings instituted or pending or, to its Knowledge, threatened against it or any of its Subsidiaries or against any of its or its Subsidiaries’ properties, assets, interests or rights, or against any of its or its Subsidiaries’ officers, directors or employees. It and each of its Subsidiaries have complied in all material respects with all laws, ordinances, requirements, regulations or orders applicable to its business (including environmental laws, ordinances, requirements, regulations or orders).

(k) Tax Matters. It and each of its Subsidiaries have filed all federal, state and local tax returns and reports (“Tax Returns”) required to be filed, and all such Tax Returns were correct and complete in all material respects. All Taxes (as defined below) owed by it or any of its Subsidiaries have been paid, are reflected as a liability in its SEC Reports, or are being contested in good faith as set forth in its Disclosure Letter. Except as set forth in its Disclosure Letter, no tax return or report filed by it or any of its Subsidiaries is under examination by any taxing authority or the subject of any administrative or judicial proceeding, and no unpaid tax deficiency has been asserted against it or any of its Subsidiaries by any taxing authority. As used herein, “Taxes” mean all taxes, charges, fees, levies or other assessments, including, without limitation, all income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise,

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profits, license, withholding, payroll, employment, employer health, excise, estimated, severance, stamp, occupation, property or other taxes, custom duties, fees, assessments or chargers of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority.

(l) Property. Except as set forth in its Disclosure Letter or reserved against as disclosed in its SEC Reports, it and each of its Subsidiaries have good and marketable title free and clear of all material liens, encumbrances, charges, defaults or equitable interests to all of the properties and assets, real and personal, reflected in the balance sheet included in its SEC Reports as of December 31, 2006 or acquired after such date. All buildings, and all fixtures, equipment, and other property and assets that are material to its or any of its Subsidiaries business, held under leases or subleases, are held under valid instruments enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws. The buildings, structures, and appurtenances owned, leased, or occupied by it and each of its Subsidiaries are in good operating condition and in a state of good maintenance and repair and comply with applicable zoning and other municipal laws and regulations, and there are no latent defects therein.

(m) Employee Benefit Plans.

(i) It has disclosed in its Disclosure Letter all employee benefit plans and programs, including without limitation: (A) all retirement, savings and other pension plans; (B) all health, severance, insurance, disability and other employee welfare plans; and (C) all employment, vacation and other similar plans, all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other employee benefit plans, programs or arrangements, and all employment or compensation arrangements, in each case for the benefit of or relating to its current and former employees (collectively, the “Benefit Plans”).

(ii) None of its Benefit Plans is a “multi-employer plan” as defined in Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

(iii) All of its Benefit Plans are in compliance in all material respects with applicable laws and regulations, and it has administered its Benefit Plans in accordance with applicable laws and regulations in all material respects.

(iv) Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, as reflected in a current favorable determination letter (based on Internal Revenue Service permitted determination request procedures), or a filing for the same has been made with the Internal Revenue Service seeking such a determination letter and that request is still awaiting decision by the Internal Revenue Service (based on Internal Revenue Service permitted determination request procedures).

(v) Each party has made available to the other party copies of summary plan descriptions and annual reports required to be filed within the last three years pursuant to ERISA or the Code with respect to its Benefit Plans.

(vi) To its Knowledge, it has not engaged in any prohibited transactions, as defined in Code section 4975 or ERISA section 406, with respect to any Benefit Plan that is a pension plan as defined in Section 3(2) of ERISA.

(vii) There are no actions, suits, investigations or claims pending, threatened or anticipated (other than routine claims for benefits) with respect to any of its Benefit Plans.

(viii)(A) No compensation or benefit that is or will be payable in connection with the transactions contemplated by this Agreement will be characterized as an “excess parachute payment” within the meaning of Code Section 280G, and (B) no Benefit Plan contains any provision that would give rise to any severance, termination or other payments or liabilities as a result of the transactions contemplated by this Agreement.

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(ix) It has not established and does not maintain a welfare plan, as defined in ERISA section 3(1), that provides benefits to an employee at its expense after a termination of employment, except as required by the Consolidated Omnibus Budget Reconciliation Act of 1985.

(n) Insurance. It and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as its management reasonably has determined to be prudent in accordance with industry practices. Since January 1, 2007, neither it nor any of its Subsidiaries has received any notice of a premium increase or cancellation or a failure to renew with respect to any insurance policy or bond or, within the last three years, has been refused any insurance coverage sought or applied for, and it has no reason to believe that existing insurance coverage cannot be renewed as and when the same shall expire upon terms and conditions as favorable as those presently in effect, other than possible increases in premiums or unavailability of coverage that do not result from any extraordinary loss experience on the part of it or its Subsidiaries.

(o) Loans; Allowance for Loan Losses.

(i) Except as set forth in its Disclosure Letter, each loan reflected as an asset in its SEC Reports or its Bank Reports (A) is evidenced by notes, agreements or evidences of indebtedness which are true, genuine and what they purport to be, (B) to the extent secured, has been secured by valid liens and security interests which have been perfected, (C) is the legal, valid and binding obligation of the obligor and any guarantor, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and no defense, offset or counterclaim has been asserted with respect to any such loan which if successful could have a Material Adverse Effect, and (D) in all material respects was made in accordance with its standard loan policies.

(ii) It has set forth in its Disclosure Letter the aggregate amounts as of a recent date of all loans, losses, advances, credit enhancements, other extensions of credit, commitments and interest-bearing assets of it and each of its Subsidiaries that have been classified by any bank examiner (whether regulatory or internal) as “Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,” “Classified” or words of similar import. It shall promptly, on a periodic basis, inform the other party hereto of any such classification arrived at any time after the date hereof.

(iii) The real property classified as other real estate owned included in non-performing assets in its SEC Reports or Bank Reports is carried net of reserve at the lower of cost or market value based on independent appraisals.

(iv) The allowance for loan losses reflected on the statements of financial condition included in its SEC Reports or Bank Reports, as of their respective dates, is adequate in all material respects under the requirements of GAAP and regulatory accounting principles to provide for reasonably anticipated losses on outstanding loans.

(p) Environmental Matters.

(i) Except as described in its Disclosure Letter, it and each of its Subsidiaries are in substantial compliance with all Environmental Laws (as defined below). Neither it nor any of its Subsidiaries has received any communication alleging that it or such Subsidiary is not in such compliance, and there are no present circumstances that would prevent or interfere with the continuation of such compliance.

(ii) Neither it nor any of its Subsidiaries has received notice of pending, and are not aware of any threatened, legal, administrative, arbitral or other proceedings, asserting Environmental Claims (as defined below) or other claims, causes of action or governmental investigations of any nature, seeking to impose, or that could result in the imposition of, any material liability arising under any Environmental Laws upon (A) it or such Subsidiary, (B) any person or entity whose liability for any Environmental Claim it or any Subsidiary has or may have retained either contractually or by operation of law, (C) any real or personal property owned or leased by it or any Subsidiary, or any real or personal property which it or any Subsidiary has been, or is, judged to have managed or to have

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supervised or to have participated in the management of, or (D) any real or personal property in which it or a Subsidiary holds a security interest securing a loan recorded on the books of it or such Subsidiary. Neither it nor any of its Subsidiaries is subject to any agreement, order, judgment, decree or memorandum by or with any court, governmental authority, regulatory agency or third party imposing any such liability.

(iii) With respect to all real and personal property owned or leased by it or any of its Subsidiaries, or all real and personal property which it or any of its Subsidiaries has been, or is, judged to have managed or to have supervised or to have participated in the management of, it will promptly provide the other party hereto with access to copies of any environmental audits, analyses and surveys that have been prepared relating to such properties (a list of which is included in its Disclosure Letter). It and all of its Subsidiaries are in compliance in all material respects with all recommendations contained in any such environmental audits, analyses and surveys.

(iv) There are no past or present actions, activities, circumstances, conditions, events or incidents that could reasonably form the basis of any Environmental Claim or other claim or action or governmental investigation that could result in the imposition of any liability arising under any Environmental Laws against it or any of its Subsidiaries or against any person or entity whose liability for any Environmental Claim it or any of its Subsidiaries has or may have retained or assumed either contractually or by operation of law.

(v) For purposes of this Agreement, the following terms shall have the following meanings:

(A) “Environmental Claim” means any written notice from any governmental authority or third party alleging potential liability (including, without limitation, potential liability for investigatory costs, clean-up, governmental response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based upon, or resulting from the presence, or release into the environment, of any Materials of Environmental Concern.

(B) “Environmental Laws” means all applicable federal, state and local laws and regulations, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, that relate to pollution or protection of human health or the environment.

(C) “Materials of Environmental Concern” means pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products and any other materials regulated under Environmental Laws.

(q) Books and Records. Its books and records and those of its Subsidiaries have been fully, properly and accurately maintained in all material respects, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein.

(r) Intellectual Property. It and its Subsidiaries own, or are licensed or otherwise possess sufficient legally enforceable rights to use, all Intellectual Property and the Technology Systems (as such terms are defined below) that are used by it and its Subsidiaries in their respective businesses as currently conducted. It and its Subsidiaries have not infringed or otherwise violated the Intellectual Property rights of any other person, and there is no claim asserted, or to its Knowledge threatened, against it or its Subsidiaries concerning the ownership, validity, registerability, enforceability, infringement, use or licensed right to use any Intellectual Property. “Intellectual Property” means all trademarks, trade names, service marks, patents, domain names, database rights, copyrights, and any applications therefor, technology, know-how, trade secrets, processes, computer software programs or applications, and tangible or intangible proprietary information or material. “Technology Systems” means the electronic data processing, information, record keeping, communications, telecommunications, hardware, third party software, networks, peripherals and computer systems, including any outsourced systems and processes, and Intellectual Property used by either party and its Subsidiaries or by a third party.

(s) Takeover Laws and Provisions. It has taken all action necessary, if any, to exempt this Agreement, the Plan of Merger, the Stock Option Agreements and the transactions contemplated hereby and thereby

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from the requirements of any “control share,” “fair price,” “affiliate transaction,” “business combination” or other anti-takeover laws and regulations of any state (collectively, “Takeover Laws”), including without limitation Sections 13.1-725 through 13.1-728 of the VSCA (because a majority of its disinterested directors approved such transactions for such purposes before any “determination date” with respect to it) and Sections 13.1-728.1 through 13.1-728.9 of the VSCA. It has taken all action required to be taken by it in order to make this Agreement and the transactions contemplated hereby (and the Stock Option Agreements and the transactions contemplated thereby) comply with, and this Agreement and the transactions contemplated hereby (and the Stock Option Agreements and the transactions contemplated thereby) do comply with, the requirements of any articles, sections or provisions of its articles of incorporation and bylaws concerning “business combination,” “fair price,” “voting requirement,” “constituency requirement” or other related provisions (collectively, “Takeover Provisions”).

(t) Financial Advisors. None of it, its Subsidiaries or any of their officers, directors or employees has employed any broker, finder or financial advisor or incurred any liability for any fees or commissions in connection with transactions contemplated herein, except that, in connection with this Agreement and the Stock Option Agreements, VFG has retained Sandler O’Neill + Partners, L.P. as its financial advisor, and FNB has retained Davenport & Company LLC as its financial advisor (in each case pursuant to engagement letters true and complete copies of which are included in its Disclosure Letter).

(u) Fairness Opinion. Prior the execution of this Agreement, VFG has received a written opinion of Sandler O’Neill + Partners, L.P., and FNB has received a written opinion of Davenport & Company LLC, each to the effect that as of the date thereof and based upon and subject to the matters set forth therein, (i) in the case of VFG, the Exchange Ratio is fair from a financial point of view to the stockholders of VFG, and (ii) in the case of FNB, the Exchange Ratio is fair from a financial point of view to the stockholders of FNB. Such opinions have not been amended or rescinded as of the date of this Agreement.

(v) Tax Treatment. As of the date hereof, it is not aware of any reason why the Merger will fail to qualify as a tax-free reorganization under Section 368(a) of the Code.

ARTICLE 4

Covenants Relating to Conduct of Business

4.1 Conduct of Business Pending Merger.

From the date hereof until the Effective Date, except as expressly contemplated or permitted by this Agreement or as set forth in its Disclosure Letter, without the prior written consent of the other party (which consent will not be unreasonably withheld or delayed), VFG and FNB each agrees that it will not, and will cause each of its Subsidiaries not to:

(a) Conduct its business other than in the ordinary and usual course or fail to use its reasonable best efforts to maintain and preserve intact its business organization, assets, employees and relationships with customers, suppliers, employees and business associates.

(b) Take any action that would adversely affect or delay the ability of either party (i) to obtain any necessary approvals, consents or waivers of any governmental authority or third party required for the transactions contemplated hereby, (ii) to perform its covenants and agreements under this Agreement, or (iii) to consummate the transactions contemplated hereby on a timely basis.

(c) Amend its Organizational Documents (except as provided herein).

(d) Other than pursuant to stock options outstanding as of the date hereof under the VFG Stock Plan and FNB Stock Plan, or pursuant to the Stock Option Agreements: (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of capital stock, or any Rights with respect thereto, except with respect to VFG to the extent permitted under the VFG DRP and the FNB DRP (ii) enter into any agreement with respect to the foregoing; or (iii) permit any additional shares of capital

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stock to become subject to new grants of employee and director stock options, stock appreciation rights, or similar stock-based rights.

(e) Enter into or amend any written employment agreement, severance or similar agreements or arrangements with any of its directors, officers or employees, or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), except for normal individual increases in compensation to employees in the ordinary course of business consistent with past practice or to comply with Section 409A of the Code.

(f) Enter into or amend (except as may be required by applicable law or the terms of any Benefit Plan) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive, welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any directors, officers or employees, including without limitation taking any action that accelerates, or the lapsing of restrictions with respect to, the vesting or exercise of any benefits payable thereunder, except in the ordinary course of business consistent with past practice or to comply with Section 409A of the Code.

(g) Incur any obligation or liability (whether absolute or contingent, excluding suits instituted against it), make any pledge, or encumber any of its assets, nor dispose of any of its assets in any other manner, except in the ordinary course of its business and for adequate value, or as otherwise specifically permitted in this Agreement.

(h) Make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of its stock (other than (i) dividends from its wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries and (ii) as permitted by Section 4.2(a)) or directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock, except for repurchases and other acquisitions of shares of its common stock made pursuant to any stock repurchase program announced prior to the date of this Agreement, or any extension or renewal thereof, in accordance with Rule 10b-18 and Regulation M, each as promulgated by the SEC.

(i) Make other than by way of foreclosures or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business, any material investment in or acquisition of (either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets) any other person other than its wholly owned Subsidiaries;

(j) Implement or adopt any change in its tax or financial accounting principles, practices or methods, including reserving methodologies, other than as may be required by GAAP, regulatory accounting guidelines or applicable law.

(k) Notwithstanding anything herein to the contrary, (i) knowingly take, any action that would reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (ii) knowingly take, or knowingly omit to take, any action that is reasonably likely to result in any of the conditions to the Merger set forth in Article 6 not being satisfied on a timely basis, except as may be required by applicable law; provided, that nothing in this Section 4.1(k) shall preclude any party from exercising its respective rights under Section 5.5.

(l) Enter into any new line of business, or change its lending, investment, underwriting, risk and asset liability management and other banking and operating policies that are material to it and its Subsidiaries, taken as a whole, except as required by applicable law banking policies in any material respect, except as may be required by applicable law.

(m) Take any other action that would make any representation or warranty in Article 3 hereof untrue.

(n) Agree to take any of the actions prohibited to it by this Section 4.1.

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4.2 Dividends.

(a) After the date of this Agreement until the Effective Date, (i) VFG may (to the extent legally permitted to do so) declare and pay quarterly dividends on outstanding shares of VFG Common Stock at a rate not to exceed $0.16 per share per quarter, (ii) FNB may (to the extent legally permitted to do so) declare and pay quarterly dividends on outstanding shares of FNB Common Stock at a rate not to exceed $0.21 per share per quarter, and (iii) its direct and indirect Subsidiaries may (to the extent legally and contractually permitted to do so), declare and pay dividends on their capital stock in cash, stock or other property to the parties or their wholly owned Subsidiaries and required payments to the holders of any trust preferred securities issued by Subsidiaries of the parties.

(b) After the date of this Agreement until the Effective Date, each party will coordinate with the other with respect to the declaration of any dividends or other distributions with respect to VFG Common Stock and FNB Common Stock and the related record dates and payment dates, it being intended that VFG and FNB stockholders will not receive more than one dividend, or fail to receive one dividend, for any single calendar quarter on their shares of VFG Common Stock or FNB Common Stock (including any shares of Continuing Corporation Common Stock received in exchange therefor in the Merger).

(c) It is the intent of VFG and FNB that the Continuing Corporation will pay an initial annual dividend of $0.64 a share, or $0.16 a share per quarter subject to, among other things: (i) applicable federal and state law and regulations; (ii) the earnings and financial condition of the Continuing Corporation; (iii) the ongoing approval thereof by the Continuing Corporation’s Board of Directors; and (iv) general economic conditions.

4.3 Transition.

To facilitate the integration of the operations of VFG and FNB and their Subsidiaries and to permit the coordination of their related operations on a timely basis, and in an effort to accelerate to the earliest time possible following the Effective Date the realization of synergies, operating efficiencies and other benefits expected to be realized by the parties as a result of the Merger, each of VFG and FNB shall, and shall cause its Subsidiaries to, consult with the other on all strategic and operational matters to the extent such consultation is not in violation of applicable laws, including laws regarding the exchange of information and other laws regarding competition.

4.4 Control of the Other Party’s Business.

Prior to the Effective Date, nothing contained in this Agreement (including, without limitation, Section 4.3) shall give FNB directly or indirectly, the right to control or direct the operations of VFG, and nothing contained in this Agreement shall give VFG, directly or indirectly, the right to control or direct the operations of FNB. Prior to the Effective Date, each party shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over it and its Subsidiaries’ respective operations.

ARTICLE 5

Additional Agreements

5.1 Reasonable Best Efforts.

Subject to the terms and conditions of this Agreement, the parties will use their reasonable best efforts to take, or cause to be taken, in good faith all actions, and to do, or cause to be done, all things necessary or desirable, or advisable under applicable laws, so as to permit consummation of the Merger as promptly as practicable and shall cooperate fully with the other party hereto to that end.

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5.2 Access to Information; Notice of Certain Matters; Confidentiality.

(a) Each party will permit the other party to make or cause to be made such investigation of its operational, financial and legal condition as the other party reasonably requests; provided, that such investigation shall be reasonably related to the Merger and shall not interfere unnecessarily with normal operations. No investigation by a party shall affect the representations and warranties of the other party.

(b) Each party will give prompt notice to the other party (and subsequently keep the other party informed on a current basis) upon its becoming aware of the occurrence or existence of any fact, event or circumstance known that (i) is reasonably likely to result in any Material Adverse Effect with respect to it, or (ii) would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein.

(c) Each party shall, and shall cause each of its directors, officers, attorneys and advisors, to maintain the confidentiality of, and not use to the detriment of the other party, all information obtained in such investigation that is not otherwise publicly disclosed by the other party, unless use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the transactions contemplated hereby, such undertaking with respect to confidentiality to survive any termination of this Agreement. If this Agreement is terminated, each party shall promptly return to the furnishing party or, at the request of the furnishing party, destroy and certify the destruction of all confidential information received from the other party.

5.3 Stockholder Approvals.

(a) VFG shall call a meeting of its stockholders to be held as soon as reasonably practicable for the purpose of obtaining the VFG Stockholder Approval and shall use its reasonable best efforts to cause such meeting to occur as soon as reasonably practicable. The Board of Directors of VFG shall support and recommend approval of the Merger Agreement and the transactions contemplated therein shall use its reasonable best efforts to obtain the VFG Stockholder Approval unless the Board has received and recommended (or submitted to stockholders) a Superior Proposal in accordance with Section 5.5.

(b) FNB shall call a meeting of its stockholders to be held as soon as reasonably practicable for the purpose of obtaining the FNB Stockholder Approval and shall use its reasonable best efforts to cause such meeting to occur as soon as reasonably practicable. The Board of Directors of FNB shall support and recommend approval of the Merger Agreement and the transactions contemplated therein shall use its reasonable best efforts to obtain the FNB Stockholder Approval unless the Board has received and recommended (or submitted to stockholders) a Superior Proposal in accordance with Section 5.5.

(c) VFG and FNB shall use their reasonable best efforts to hold their respective stockholder meetings on the same day.

(d) Nothing in this Agreement shall be deemed to relieve either party of its obligation to submit this Agreement to its stockholders for a vote on the adoption thereof; provided, that neither party will be required to submit this Agreement to its stockholders if doing so would not be permissible under applicable law.

5.4 Registration Statement; Joint Proxy Statement; SEC Filings.

(a) Each party will cooperate with the other party, and their representatives, in the preparation of a registration statement on Form S-4 or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto (the “Registration Statement”), to be filed by VFG with the SEC in connection with the issuance of Continuing Corporation Common Stock in the Merger, and the parties will prepare a joint proxy statement and prospectus and other proxy solicitation materials of VFG and FNB constituting a part thereof (the “Joint Proxy Statement”). Neither the Joint Proxy Statement nor the Registration

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Statement shall be filed, and, prior to the termination of this Agreement, no amendment or supplement to the Joint Proxy Statement or the Registration Statement shall be filed by VFG or FNB without consultation with the other party and its counsel. VFG will use all reasonable efforts, in which FNB will reasonably cooperate as necessary, to file the Registration Statement, including the Joint Proxy Statement in preliminary form, with the SEC as promptly as reasonably practicable and to cause the Registration Statement to be declared effective under the Securities Act of 1933 (the “Securities Act”) as promptly as reasonably practicable after the filing thereof.

(b) Each party agrees, as to itself and its Subsidiaries, that none of the information supplied or to be supplied by it for inclusion or incorporation by reference in (i) the Registration Statement will, at the time the Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) the Joint Proxy Statement and any amendment or supplement thereto will, at the date of mailing to shareholders and at the times of the respective stockholder meetings, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which such statement was made, not misleading. Each party further agrees that if it becomes aware that any information furnished by it that would cause any of the statements in the Joint Proxy Statement or the Registration Statement to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, to promptly inform the other party thereof and to take appropriate steps to correct the Joint Proxy Statement or the Registration Statement.

5.5 No Other Acquisition Proposals.

(a) Each party agrees that it will not, and will cause its Subsidiaries and its and its Subsidiaries’ officers, directors, employees, agents and representatives (including any financial advisor, attorney or accountant retained by it or any of its Subsidiaries) not to, directly or indirectly, (i) initiate, solicit or encourage inquiries or proposals with respect to, (ii) furnish any confidential or nonpublic information relating to, or (iii) engage or participate in any negotiations or discussions concerning, an Acquisition Transaction (as defined below). Notwithstanding the foregoing, nothing contained in this Section 5.5 shall prohibit either party, prior to its respective meeting of stockholders to be held pursuant to Section 5.3, from furnishing nonpublic information to, or entering into discussions or negotiations with, any person or entity that makes an unsolicited, bona fide written proposal regarding an Acquisition Transaction with respect to such party if, and only to the extent that (i) such party’s board of directors concludes in good faith, after consultation with and based upon the written advice of outside counsel, that the failure to take such actions would be inconsistent with its fiduciary duties to stockholders under applicable law, (ii) before taking such action, such party receives from such person or entity an executed confidentiality agreement, and (iii) such party’s board of directors concludes in good faith that the proposal regarding the Acquisition Transaction constitutes or is reasonably likely to result in a Superior Proposal (as defined below). Each party shall immediately (within 24 hours) notify the other party orally and in writing of its receipt of any such proposal or inquiry, the material terms and conditions thereof, the identity of the person making such proposal or inquiry, and will keep the other party apprised of any related developments, discussions and negotiations on a current basis, including by providing a copy of all material documentation or correspondence relating thereto.

(b) For purposes of this Agreement, an “Acquisition Transaction” means any of the following transactions involving VFG or FNB, or their respective Subsidiaries, other than as contemplated by this Agreement: (i) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving a party or its Subsidiaries whose assets, individually or in the aggregate, constitute more than 10% of the consolidated assets of the party; (ii) any acquisition or purchase, direct or indirect, of 10% or more of the consolidated assets of a party and its Subsidiaries or 10% or more of any class of equity or voting securities of a party or its Subsidiaries whose assets, individually or in the aggregate, constitute more than 10% of the consolidated assets of the party; or (iii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning 10% or more

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of any class of equity or voting securities of a party or its Subsidiaries whose assets, individually or in the aggregate, constitute more than 10% of the consolidated assets of the party.

(c) For purposes of this Agreement, a “Superior Proposal” means a bona fide written proposal for an Acquisition Transaction that the Board of Directors of VFG or FNB, as the case may be, concludes in good faith, after consultation with its financial and legal advisors, taking into account all legal, financial, regulatory and other aspects of the proposal and the person making the proposal (including any break-up fees, expense reimbursement provisions and conditions to consummation) (A) is more favorable to the stockholders of VFG or FNB, as the case may be, from a financial point of view, than the Merger and (B) is fully financed or reasonably capable of being fully financed and reasonably likely to receive all required approvals of Governmental Authorities (as defined below in Section 5.6(a)) on a timely basis and otherwise reasonably capable of being completed on the terms proposed; provided that, for purposes of this definition of “Superior Proposal,” the Acquisition Transaction shall have the meaning assigned to such term in Section 5.5(b), except the reference to “10% or more” in such definition shall be deemed to be a reference to “a majority” and “Acquisition Transaction” shall only be deemed to refer to a transaction involving FNB or VFG or one of their respective banking Subsidiaries.

(d) Nothing in this Section 5.5 shall permit either party to terminate this Agreement or affect any other obligation of the parties under this Agreement.

5.6 Applications and Consents.

(a) The parties shall cooperate and use their reasonable best efforts to prepare as promptly as possible all documentation, to effect all filings and to obtain all permits, consents, approvals and authorizations of each Governmental Authority (as defined below) and all third parties necessary to consummate the transactions contemplated by this Agreement (the “Regulatory Approvals”) and will make all necessary filings in respect of the Regulatory Approvals as soon as practicable. For the purposes of this Agreement, a “Governmental Authority” means any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, or any industry self-regulatory authority.

(b) Each party will promptly furnish to the other party copies of applications filed with all Governmental Authorities and copies of written communications received by such party from any Governmental Authority with respect to the transactions contemplated hereby. Each party will consult with the other party with respect to the obtaining of all Regulatory Approvals and other material consents from third parties advisable to consummate the transactions contemplated by this Agreement, and each party will keep the other party apprised of the status of material matters relating to completion of the transactions contemplated hereby. All documents that the parties or their respective Subsidiaries are responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby (including to obtain Regulatory Approvals) will comply as to form in all material respects with the provisions of applicable law.

5.7 Public Announcements.

Prior to the Effective Date, the parties will consult with each other as to the form and substance of any press release or other public statement materially related to this Agreement prior to issuing such press release or public statement or making any other public disclosure related thereto (including any broad based employee communication that is reasonably likely to become the subject of public disclosure); provided, that nothing in this Section 5.7 shall prohibit any party from making any disclosure necessary in order to satisfy such party’s disclosure obligations imposed by applicable law or the rules established by the Nasdaq Stock Market or any other self-regulatory organization.

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5.8 Affiliate Agreements.

VFG has identified to FNB all persons who are, as of the date hereof, directors or executive officers of VFG (the “VFG Affiliates”), and FNB has identified to VFG all persons who are, as of the date hereof, directors or executive officers of FNB (the “FNB Affiliates”). Each party will use its reasonable best efforts to obtain a written agreement in the form of Exhibit 5.8 hereto to be delivered, on or prior to the date hereof to FNB from each VFG Affiliate and to VFG from each FNB Affiliate, on or prior to the date hereof.

5.9 Employee Benefit Plans.

(a) Following the Effective Date, the Continuing Corporation at its election shall either (i) provide generally to officers and employees of FNB and its Subsidiaries, who at or after the Effective Time become employees of the Continuing Corporation or its Subsidiaries (“FNB Continuing Employees”), employee benefits under Benefit Plans maintained by the Continuing Corporation, on terms and conditions which are the same as for similarly situated officers and employees of the Continuing Corporation and its Subsidiaries, or (ii) maintain for the benefit of the FNB Continuing Employees, the Benefit Plans maintained by FNB immediately prior to the Effective Date; provided that the Continuing Corporation may amend any Benefit Plan maintained by FNB immediately prior to the Effective Date to comply with any law or as necessary and appropriate for other business reasons. Prior to the Effective Date, VFG and FNB shall cooperate in reviewing, evaluating and analyzing their respective Benefit Plans with a view towards developing appropriate and effective Benefit Plans for employees of VFG and FNB and their Subsidiaries after the Effective Date.

(b) For purposes of participation, vesting and benefit accrual (except not for purposes of benefit accrual with respect to any plan in which such credit would result in a duplication of benefits) under the Continuing Corporation’s Benefit Plans, service with or credited by FNB or any of its Subsidiaries shall be treated as service with the Continuing Corporation; provided that this provision shall not cause VFG’s tax-qualified defined benefit pension plan (which is not open to new participants) to be opened to new participants or to provide additional credit for pre-Effective Date service for benefit accrual purposes. To the extent permitted under applicable law, the Continuing Corporation shall cause welfare Benefit Plans maintained by the Continuing Corporation that cover the FNB Continuing Employees after the Effective Date to (i) waive any waiting period and restrictions and limitations for preexisting conditions or insurability (except for pre-existing conditions that were excluded, or restrictions or limitations that were applicable, under the Benefit Plans maintained by FNB), and (ii) cause any deductible, co-insurance, or maximum out-of-pocket payments made by the FNB Continuing Employees under welfare Benefit Plans maintained by FNB to be credited to such FNB Continuing Employees under welfare Benefit Plans maintained by the Continuing Corporation, so as to reduce the amount of any deductible, co-insurance, or maximum out-of-pocket payments payable by such FNB Continuing Employees under welfare Benefit Plans maintained by the Continuing Corporation.

(c) Each employee of VFG or FNB, or one of their respective Subsidiaries, at the Effective Date who is terminated by the Continuing Corporation after the Effective Date, excluding any employee who has a contract providing for severance, shall be entitled to severance pay in accordance with the severance policy adopted prior to the Effective Date by the parties hereto, if and to the extent that such employee is entitled to severance pay under such policy. Such employee’s service with VFG or FNB shall be treated as service with the Continuing Corporation for purposes of determining the amount of severance pay, if any, under the Continuing Corporation’s severance policy.

(d) Nothing in this Section 5.9 shall be interpreted as preventing the Continuing Corporation, from and after the Effective Date, from amending, modifying or terminating any Benefit Plans maintained by either VFG or FNB or their respective Subsidiaries or any other contracts, arrangements, commitments or plans of either party in accordance with their terms and applicable law.

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5.10 Nasdaq Listing.

The parties will use all reasonable best efforts to cause the shares of the Continuing Corporation Common Stock to be issued in the Merger to be approved for listing on the Nasdaq Global Select Market, subject to official notice of issuance, as promptly as practicable, and in any event before the Effective Date.

5.11 Indemnification.

(a) Following the Effective Date, the Continuing Corporation shall indemnify, defend and hold harmless any person who has rights to indemnification from FNB, to the same extent and on the same conditions as such person is entitled to indemnification pursuant to applicable law and FNB’s Organizational Documents, as in effect on the date of this Agreement, to the extent legally permitted to do so with respect to matters occurring on or before the Effective Date. Without limiting the foregoing, in any case in which corporate approval may be required to effectuate any indemnification, the Continuing Corporation shall direct, if the party to be indemnified elects, that the determination of permissibility of indemnification shall be made by independent counsel mutually agreed upon between the Continuing Corporation and the indemnified party. The Continuing Corporation shall use its reasonable best efforts to maintain FNB’s existing directors’ and officers’ liability policy, or some other policy, including VFG’s existing policy, providing at least comparable coverage, covering persons who are currently covered by such insurance of FNB for a period of six years after the Effective Date on terms no less favorable to the directors and officers than those in effect on the date hereof.

(b) The provisions of this Section 5.11 are intended to be for the benefit of and shall be enforceable by each indemnified party and his or her heirs and representatives.

5.12 Employment Arrangements.

(a) The Continuing Corporation will, as of and after the Effective Date, assume and honor all employment agreements, severance agreements and deferred compensation agreements that VFG and FNB and their respective Subsidiaries have with their current and former officers and directors and which are set forth in its Disclosure Letter, except to the extent any such agreements shall be superseded on or after the Effective Date.

(b) The Continuing Corporation will enter into employment agreements, which will become effective as of the Effective Date, with William P. Heath, Jr., O. R. Barham, Jr., Litz H. Van Dyke, Jeffrey W. Farrar, and Gregory W. Feldmann in the form of Exhibit 5.12.

(c) Each party will use its reasonable best efforts to obtain appropriate agreements and waivers from certain of its officers and its Subsidiaries’ officers that the Merger will not constitute a change in control within the meaning of their respective employment or change in control agreements.

5.13 Takeover Laws.

If any Takeover Law may become, or may purport to be, applicable to the transactions contemplated hereby or by the Stock Option Agreements, each party and the members of their respective Boards of Directors will grant such approvals and take such actions as are necessary (other than as contemplated by Section 5.3) so that the transactions contemplated by this Agreement and by the Stock Option Agreements may be consummated as promptly as practicable on the terms contemplated hereby and thereby and otherwise act to eliminate or minimize the effects of any Takeover Law on any of the transactions contemplated by this Agreement or by the Stock Option Agreements.

5.14 Change of Method.

VFG and FNB shall be empowered, upon their mutual agreement and at any time prior to the Effective Date, to change the method or structure of effecting the combination of VFG and FNB (including the provisions of Article 1), if and to the extent they both deem such change to be necessary, appropriate or desirable; provided

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that no such change shall (i) alter or change the Exchange Ratio or the number of shares of Continuing Corporation Common Stock received by FNB stockholders in exchange for each share of FNB Common Stock and VFG stockholders in exchange for each share of VFG Common Stock, (ii) adversely affect the tax treatment of FNB’s stockholders or VFG’s stockholders pursuant to this Agreement, (iii) adversely affect the tax treatment of FNB or VFG pursuant to this Agreement or (iv) materially impede or delay the consummation of the transactions contemplated by this Agreement in a timely manner. The parties agree to reflect any such change in an appropriate amendment to this Agreement executed by both parties in accordance with Section 8.3.

ARTICLE 6

Conditions to the Merger

6.1 General Conditions.

The respective obligations of each party to perform this Agreement and consummate the Merger are subject to the satisfaction of the following conditions, unless waived by each party pursuant to Section 8.3.

(a) Corporate Action. All corporate action necessary to authorize the execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby shall have been duly and validly taken, including without limitation the approval of this Agreement by the requisite vote of the shareholders of VFG and FNB.

(b) Regulatory Approvals. VFG and FNB shall have received all Regulatory Approvals required in connection with the transactions contemplated by this Agreement, all notice periods and waiting periods required after the granting of any such approvals shall have passed, and all such approvals shall be in effect; provided, that no such approvals shall have imposed any condition or requirement that would, after the Effective Date, have or be reasonably likely to have a Material Adverse Effect on the Continuing Corporation (after giving effect to the Merger).

(c) Registration Statement. The Registration Statement shall have been declared effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and be in effect and no proceedings for that purpose shall have been initiated by the SEC and not withdrawn.

(d) Nasdaq Listing. The shares of the Continuing Corporation Common Stock to be issued to the holders of FNB Common Stock upon consummation of the Merger shall have been authorized for listing on the Nasdaq Global Select Market, subject to official notice of issuance.

(e) Legal Proceedings. Neither party shall be subject to any order, decree or injunction of a court or agency of competent jurisdiction that enjoins or prohibits the consummation of the Merger.

6.2 Conditions to Obligations of VFG.

The obligations of VFG to perform this Agreement and consummate the Merger are subject to the satisfaction of the following conditions, unless waived by VFG pursuant to Section 8.3.

(a) Representations and Warranties. The representations and warranties of FNB set forth in Article 3, after giving effect to Sections 3.1 and 3.2, shall be true and correct as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Effective Date as though made on and as of the Effective Date and VFG shall have received a certificate, dated as of the Effective Date, signed on behalf of FNB by the Chief Executive Officer and Chief Financial Officer of FNB to such effect.

(b) Performance of Obligations. FNB shall have performed in all material respects all obligations required to be performed by it under this Agreement before the Effective Date and VFG shall have received a certificate, dated as of the Effective Date, signed on behalf of FNB by the Chief Executive Officer and Chief Financial Officer of FNB to such effect.

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(c) Tax Opinion. VFG shall have received a written opinion from LeClair Ryan, A Professional Corporation, dated the Effective Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. In rendering such opinion, such counsel shall be entitled to rely upon representations of officers of VFG and FNB reasonably satisfactory in form and substance to such counsel.

6.3 Conditions to Obligations of FNB.

The obligations of FNB to perform this Agreement and consummate the Merger are subject to the satisfaction of the following conditions, unless waived by FNB pursuant to Section 8.3.

(a) Representations and Warranties. The representations and warranties of VFG set forth in Article 3, after giving effect to Sections 3.1 and 3.2, shall be true and correct as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Effective Date as though made on and as of the Effective Date and FNB shall have received a certificate, dated as of the Effective Date, signed on behalf of VFG by the Chief Executive Officer and Chief Financial Officer of VFG to such effect.

(b) Performance of Obligations. VFG shall have performed in all material respects all obligations required to be performed by it under this Agreement before the Effective Date and FNB shall have received a certificate, dated as of the Effective Date, signed on behalf of VFG by the Chief Executive Officer and Chief Financial Officer of VFG to such effect.

(c) Tax Opinion. FNB shall have received a written opinion from Troutman Sanders LLP, dated the Effective Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. In rendering such opinion, such counsel shall be entitled to rely upon representations of officers of FNB and VFG reasonably satisfactory in form and substance to such counsel.

ARTICLE 7

Termination

7.1 Termination.

This Agreement may be terminated and the Merger abandoned at any time before the Effective Date, whether before or after the approval of the Merger by the stockholders of VFG or FNB, as provided below:

(a) Mutual Consent. By the mutual consent in writing of VFG and FNB.

(b) Closing Delay. By either party, evidenced by written notice, if the Merger has not been consummated by June 30, 2008, or such later date as shall have been agreed to in writing by the parties, if the failure to consummate the Merger on or before such date is not caused by any breach of this Agreement by the party electing to terminate pursuant to this Section 7.1(b).

(c) Conditions to Performance Not Met. By either VFG or FNB in the event of a breach of any representation or warranty, covenant or agreement contained in this Agreement on the part of the other party, which breach would result in, if occurring or continuing on the Effective Date, the failure of the conditions to the terminating party’s obligations set forth in Sections 6.2 and 6.3, and which cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach.

(d) Solicitation and Recommendation Matters. By either party in the event that (i) the Board of Directors of the other party has failed to recommend that its stockholders vote in favor of this Agreement or has withdrawn, modified or qualified such recommendation in a manner materially adverse to the terminating party, (ii) the other party has failed to substantially comply with its obligations under

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Section 5.3 or 5.5, (iii) the other party negotiates or authorizes the conduct of negotiations (and twenty business days have elapsed without such negotiations being discontinued) with a third party (it being understood and agreed that “negotiate” shall not be deemed to include the request and receipt of information from, any person that submits an Acquisition Transaction or discussions regarding such information for the sole purpose of ascertaining the terms of such Acquisition Transaction) regarding an Acquisition Transaction other than the Merger, or (iv) the Board of Directors of the other party has recommended or endorsed Superior Proposal.

7.2 Effect of Termination.

In the event this Agreement is terminated pursuant to Section 7.1, this Agreement shall become void and have no effect, except that (i) the provisions hereof relating to confidentiality and public announcements set forth in Sections 5.2(c) and 5.7, respectively, and this Article 7, shall survive any such termination, and (ii) a termination pursuant to 7.1(c) or 7.1(d) hereof shall not relieve the breaching party from liability for an uncured intentional breach of any provision of this Agreement giving rise to such termination. Notwithstanding the foregoing, in the event of any termination of this Agreement, each of the Stock Option Agreements shall remain in full force and effect to the extent provided therein.

7.3 Non-Survival of Representations, Warranties and Covenants.

Except for Article 1, Article 2, Sections 5.2(c), 5.11, 5.12 and this Article 7, the respective representations, warranties, obligations, covenants, and agreements of the parties shall be deemed only to be conditions of the Merger and shall not survive the Effective Date.

7.4 Fees and Expenses.

(a) Except as otherwise provided in this Agreement, each party will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby, except that VFG and FNB will each bear and pay one-half of the following expenses: (i) the cost of the first draft of this Agreement, (ii) the printing costs incurred in connection with the printing of the Registration Statement and the Joint Proxy Statement and (iii) all listing, filing or registration fees, including, without limitation, fees paid for filing the Registration Statement with the SEC, and any other fees paid for filings with any Governmental Authority.

(b) If this Agreement is terminated by VFG or FNB because of a willful and material breach by the other party of any representation, warranty, covenant, undertaking or restriction set forth herein, and provided that the terminating party shall not have been in breach (in any material respect) of any representation and warranty, covenant, undertaking or restriction contained herein, then the breaching party shall reimburse the other party for all reasonable out-of-pocket expenses incurred by it in connection with the transactions contemplated by this Agreement and the enforcement of its rights hereunder.

(c) Final settlement with respect to the reimbursement of such fees and expenses by the parties shall be made within 30 days after the termination of this Agreement.

(d) Nothing contained in this Section 7.4 shall constitute or shall be deemed to constitute liquidated damages for the willful and material breach by a party of the terms of this Agreement or otherwise limit the rights of the non-breaching party.

ARTICLE 8

General Provisions

8.1 Entire Agreement.

This Agreement, including the Disclosure Letters and Exhibits, together with the Stock Option Agreements, contain the entire agreement between VFG and FNB with respect to the Merger and the related transactions and supersedes all prior arrangements or understandings with respect thereto.

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8.2 Binding Effect; No Third Party Rights.

This Agreement shall bind VFG and FNB and their respective successors and assigns. Other than Sections 5.11 and 5.12, nothing in this Agreement is intended to confer upon any person, other than the parties hereto or their respective successors, any rights or remedies under or by reason of this Agreement.

8.3 Waiver and Amendment.

Any term or provision of this Agreement may be waived in writing at any time by the party that is, or whose stockholders are, entitled to the benefits thereof, and this Agreement may be amended or supplemented by a written instrument duly executed by the parties hereto at any time, whether before or after the later of the date of the VFG Stockholder Meeting or the FNB Stockholder Meeting, except statutory requirements and requisite approvals of stockholders and Governmental Authorities.

8.4 Governing Law.

This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia without regard to the conflict of law principles thereof.

8.5 Notices.

All notices, requests and other communications given or made under this Agreement must be in writing and will be deemed given (i) when personally delivered or facsimile transmitted (with confirmation), or (ii) on the third business day after being mailed by registered or certified mail (return receipt requested) to the persons and addresses set forth below or such other place as such party may specify by notice.

If to VFG:
	O. R. Barham, Jr.
	President and Chief Executive Officer
	Virginia Financial Group, Inc.
	102 South Main Street
	Post Office Box 71
	Culpeper, Virginia 22701-0071
	Tele:  (540) 825-4809
	Fax:   (540) 825-7568
with a copy to:
	George P. Whitley, Esq.
	LeClair Ryan, A Professional Corporation
	Riverfront Plaza, East Tower
	951 East Byrd Street
	Richmond, Virginia 23219
	Tele:  (804) 343-4089
	Fax:   (804) 783-7628

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If to FNB:
	William P. Heath, Jr.
	President and Chief Executive Officer
	FNB Corporation
	105 Arbor Drive
	Christiansburg, Virginia 24073-6589
	Tele:  (540) 382-6041
	Fax:   (540) 381-6785
with a copy to:
	Fred W. Palmore III, Esq.
	Troutman Sanders LLP
	Troutman Sanders Building
	1001 Haxall Point
	Richmond, Virginia 23219
	Tele:  (804) 697-1396
	Fax:   (804) 697-1339

8.6 Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts together shall constitute one and the same agreement.

8.7 Waiver of Jury Trial.

Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation, directly or indirectly, arising out of or relating to this Agreement or the transactions contemplated by this Agreement. Each party certifies and acknowledges that (i) it understands and has considered the implications of this waiver and (ii) it makes this waiver voluntarily.

8.8 Severability.

In the event that any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provisions hereof. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. Further, the parties agree that a court of competent jurisdiction may reform any provision of this Agreement held invalid or unenforceable so as to reflect the intended agreement of the parties hereto.

[Signatures on following page]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in counterparts by their duly authorized officers and their corporate seals to be affixed hereto, all as of the date first written above.

VIRGINIA FINANCIAL GROUP, INC.
By:	/s/    O. R. BARHAM, JR.
	O. R. Barham, Jr.
	President and Chief Executive Officer
FNB CORPORATION
By:	/s/    WILLIAM P. HEATH, JR.
	William P. Heath, Jr.
	President and Chief Executive Officer

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EXHIBIT 1.1(a)

To the Agreement and

Plan of Reorganization

PLAN OF MERGER

BETWEEN

FNB CORPORATION

AND

VIRGINIA FINANCIAL GROUP, INC.

Pursuant to this Plan of Merger (“Plan of Merger”), FNB Corporation, a Virginia corporation (“FNB”), shall merge with and into Virginia Financial Group, Inc., a Virginia corporation (“VFG”).

ARTICLE 1

Terms of the Merger

1.1 The Merger.

Subject to the terms and conditions of the Agreement and Plan of Reorganization, dated as of July 26, 2007, between FNB and VFG (the “Agreement”), at the Effective Date, FNB shall be merged with and into VFG (the “Merger”) in accordance with the provisions of Virginia law and with the effect specified in Section 13.1-721 of the Virginia Stock Corporation Act (the “Act”). VFG shall be the surviving corporation of the Merger (VFG as existing on and after the Effective Date is sometimes referred to herein as the “Continuing Corporation”). The Merger shall become effective on such date and time as may be determined in accordance with Section 1.2 of the Agreement (the “Effective Date”).

ARTICLE 2

Manner of Converting and Exchanging Shares

2.1 Conversion of Shares; Exchange of Shares.

At the Effective Date, by virtue of the Merger and without any action on the part of the stockholders of FNB and VFG, as the case may be, such stockholders will be entitled to the following:

(a) Each share of common stock, par value $5.00 per share, of FNB (“FNB Common Stock”) issued and outstanding immediately before the Effective Date will be converted into and exchanged for 1.585 fully paid and nonassessable shares of common stock, par value $1.00 per share, of the Continuing Corporation (“Continuing Corporation Common Stock”) pursuant to the terms and conditions set forth in the Agreement and this Plan of Merger (the “Exchange Ratio”).

(b) All shares of FNB Common Stock converted pursuant to this Section 2.1 shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist as of the Effective Date. Each certificate previously representing any such shares (the “Old FNB Certificates”) shall cease to represent any rights except the right to receive with respect to each underlying share of FNB Common Stock (i) a new certificate representing the number of whole shares of Continuing Corporation Common Stock into which the shares of FNB Common Stock represented by the Old FNB Certificate have been converted pursuant to this Section 2.1 upon the surrender of such Old FNB Certificate in accordance with Section 2.2, (ii) in accordance with Section 2.3, cash in lieu of fractional shares of Continuing Corporation Common Stock, and (iii) any dividends or distributions which the holder thereof has the right to receive pursuant to Section 2.4.

(c) Each share of common stock, par value $1.00 per share, of VFG (“VFG Common Stock”) issued and outstanding immediately before the Effective Date shall remain an issued and outstanding share of

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Continuing Corporation Common Stock. Each certificate previously representing shares of VFG Common Stock shall continue to represent an equal number of shares of Continuing Corporation Common Stock on and after the Effective Date.

(d) In the event VFG or FNB changes (or establishes a record date for changing) the number of shares of its common stock issued and outstanding before the Effective Date as a result of a stock split, stock dividend, recapitalization, reclassification, reorganization or similar transaction with respect to its outstanding common stock, and the record date therefor shall be before the Effective Date, appropriate and proportional adjustments will be made to the Exchange Ratio.

(e) Each share of FNB Common Stock held by either party and each share of VFG Common Stock held by FNB or its subsidiaries prior to the Effective Date (in each case other than in a fiduciary or agency capacity or on behalf of third parties as a result of debts previously contracted) shall be cancelled and retired and shall cease to exist at the Effective Date and no consideration shall be issued in exchange therefor; provided, that such shares of VFG Common Stock shall resume the status of authorized and unissued shares of Continuing Corporation Common Stock.

2.2 Exchange Procedures.

(a) At the Effective Date, the Continuing Corporation shall deposit, or shall cause to be deposited, with its transfer agent or such other transfer agent or depository or trust institution of recognized standing approved by VFG and FNB (in such capacity, the “Exchange Agent”), for the benefit of the holders of the Old FNB Certificates, certificates representing Continuing Corporation Common Stock (“New Certificates”), together with any dividends or distributions with respect thereto and any cash to be paid hereunder in lieu of fractional shares of Continuing Corporation Common Stock, without any interest thereon (the “Exchange Fund”), to be paid pursuant to Article 1 and this Article 2 in exchange for outstanding shares of FNB Common Stock.

(b) As promptly as practicable after the Effective Date, the Continuing Corporation shall cause the Exchange Agent to send to each former stockholder of record of FNB immediately before the Effective Date transmittal materials for use in exchanging such stockholder’s Old FNB Certificates for New Certificates based upon the Exchange Ratio.

(c) At its election, the Continuing Corporation may, but shall not be required to, cause the Exchange Agent to send to each stockholder of record of VFG immediately before the Effective Date transmittal materials for use in exchanging such stockholder’s certificates representing shares of VFG Common Stock (“Old VFG Certificates”) for New Certificates representing an equal number of shares of Continuing Corporation Common Stock. If the Continuing Corporation elects to require the surrender of the Old VFG Certificates, it shall comply with Section 2.2(a) above with respect to, and for the benefit of, the holders of the Old VFG Certificates.

(d) The Continuing Corporation shall cause the New Certificates for shares of Continuing Corporation Common Stock into which shares of FNB Common Stock and VFG Common Stock, to the extent the Continuing Corporation elects to require that Old VFG Certificates be surrendered and exchanged for New Certificates pursuant to Section 2.2(c) above, are converted at the Effective Date or dividends or distributions which such stockholder shall be entitled to receive and any cash to be paid in lieu of fractional shares to be paid to such stockholder upon delivery to the Exchange Agent of Old FNB Certificates and Old VFG Certificates representing such shares of FNB and VFG, together with the transmittal materials duly executed and completed in accordance with the instructions thereto. No interest will accrue or be paid on any such cash to be paid pursuant to Section 2.3.

(e) Any portion of the Exchange Fund that remains unclaimed by the stockholders of FNB and VFG, to the extent the Continuing Corporation elects to require that Old VFG Certificates be surrendered and exchanged for New Certificates pursuant to Section 2.2(c) above, for six months after the Effective Date shall be returned to the Continuing Corporation (together with any dividends or earnings in respect thereof). Any stockholders of FNB

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and VFG, if applicable, who have not complied with this Article 2 shall thereafter be entitled to look only to the Continuing Corporation, and only as a general creditor thereof, for payment of the consideration deliverable in respect of each share of FNB Common Stock and VFG Common Stock such stockholder holds as determined pursuant to this Agreement, without any interest thereon.

(f) None of the Exchange Agent, any of the parties hereto or any of their respective Subsidiaries shall be liable to any stockholder of FNB or VFG for any amount of property delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

2.3 No Fractional Shares.

Each holder of shares of FNB Common Stock exchanged pursuant to the Merger which would otherwise have been entitled to receive a fraction of a share of Continuing Corporation Common Stock (after taking into account all Old FNB Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest and rounded to the nearest cent) in an amount equal to such fractional part of a share of Continuing Corporation Common Stock multiplied by the closing sale price of VFG Common Stock on the Nasdaq Global Select Market on the trading day immediately preceding the Effective Date.

2.4 Dividends.

No dividend or other distribution payable to the holders of record of FNB Common Stock or VFG Common Stock, to the extent the Continuing Corporation elects to require that Old VFG Certificates be surrendered and exchanged for New Certificates pursuant to Section 2.2(c) above, at, or as of, any time after the Effective Date will be paid to the holder of any Old FNB Certificates or Old VFG Certificates, if applicable, until such holder physically surrenders such certificate (or customary indemnity if any of such certificate is lost, stolen or destroyed) for exchange as provided in Section 2.2 of this Plan of Merger, promptly after which time all such dividends or distributions will be paid (without interest).

2.5 FNB Stock Options and Other Equity-Based Awards.

(a) Each option to purchase shares of FNB Common Stock (a “FNB Stock Option”) granted under an equity or equity-based compensation plan of FNB (a “FNB Stock Plan”), whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Date shall cease, at the Effective Date, to represent a right to acquire FNB Common Stock and shall be converted at the Effective Date, without any action on the part of the holder thereof, into an option to purchase shares of Continuing Corporation Common Stock (a “Continuing Corporation Stock Option”) on the same terms and conditions as were applicable under such FNB Stock Option (but taking into account any changes thereto, including any acceleration thereof, provided for in the relevant FNB Stock Plan or in the related award document by reason of the Merger).

(b) The number of shares of Continuing Corporation Common Stock subject to each such Continuing Corporation Stock Option shall be equal to the number of shares of FNB Common Stock subject to each such FNB Stock Option multiplied by the Exchange Ratio, rounded, if necessary, to the nearest whole share of Continuing Corporation Common Stock, and such Continuing Corporation Stock Option shall have an exercise price per share (rounded to the nearest cent) equal to the per share exercise price specified in such FNB Stock Option divided by the Exchange Ratio; provided that the exercise price, the number of shares of Continuing Corporation Common Stock subject to such option and the terms and conditions of exercise of such option (after taking into account the effect of any accelerated vesting thereof, if applicable) shall be determined in a manner consistent with the requirements of Section 424(a) of the Internal Revenue Code of 1986, as amended.

(c) Each restricted stock award granted under a FNB Stock Plan (a “FNB Stock Award”) which is unvested or contingent and outstanding immediately prior to the Effective Date, shall cease, at the Effective Date, to represent any rights with respect to shares of FNB Common Stock and shall be converted without any action on

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the part of the holder thereof, into a restricted stock award of the Continuing Corporation (a “Continuing Corporation Stock Award”), on the same terms and conditions as were applicable under the FNB Stock Awards (but taking into account any changes thereto, including any acceleration thereof, provided for in the FNB Stock Plan or in the related award document by reason of the Merger). The number of shares of Continuing Corporation Common Stock subject to each such Continuing Corporation Stock Award shall be equal to the number of shares of FNB Common Stock subject to the FNB Stock Award multiplied by the Exchange Ratio, rounded, if necessary, to the nearest whole share of Continuing Corporation Common Stock.

ARTICLE 3

Articles of Incorporation and Bylaws of the Continuing Corporation

The Articles of Incorporation and Bylaws of the Continuing Corporation as in effect immediately prior to the Effective Date, as such of the Agreement and as such Bylaws are to be amended as set forth in Exhibit 1.3(b) to the Agreement, will be the Articles of Incorporation and Bylaws of the Continuing Corporation; provided that the name of the Continuing Corporation shall be determined as set forth in Section 1.3 of the Agreement and as reflected in the Articles of Merger filed with the Virginia State Corporation Commission to effect the Merger.

ARTICLE 4

Conditions Precedent

The obligations of FNB and VFG to effect the Merger as herein provided shall be subject to satisfaction, unless duly waived, of the conditions set forth in the Agreement.

ARTICLE 5

Termination or Amendment

This Plan of Merger may be terminated or amended at any time before the Effective Date by the parties hereto as provided in Article 7 and Section 8.3 of the Agreement.

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EX-99.1

Exhibit 99.1

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (the “Agreement”), dated as of July 26, 2007, between VIRGINIA FINANCIAL GROUP, INC., a Virginia corporation (“Issuer”), and FNB CORPORATION, a Virginia corporation (“Grantee”).

WITNESSETH

WHEREAS, the Boards of Directors of Grantee and Issuer have approved the strategic business affiliation of their companies through the merger of Grantee and Issuer (the “Merger”) pursuant to the terms and conditions of an Agreement and Plan of Reorganization, dated July 26, 2007, and a related Plan of Merger (together referred to herein as the “Merger Agreement”), which agreement was executed and delivered immediately before the execution and delivery of this Agreement;

WHEREAS, as a condition to and as consideration for Grantee’s entering into the Merger Agreement, Issuer has agreed to grant Grantee the Option (as defined below); and

WHEREAS, in connection with entering into the Merger Agreement, Grantee has issued the Issuer an option pursuant to a Stock Option Agreement in the form attached to the Merger Agreement.

NOW, THEREFORE, in consideration of the premises contained herein and in the Merger Agreement, the parties hereto agree as follows:

1. Grant of Option.

(a) Subject to the terms and conditions set forth herein, Issuer hereby grants to Grantee an irrevocable option (the “Option”) to purchase up to 2,147,766 shares of Issuer’s common stock, par value $1.00 per share (“Common Stock”), at a price equal to the lesser of (i) $20.17 per share or (ii) the closing sale price of the Common Stock on the Nasdaq Global Select Market on the trading day immediately preceding the exercise date, as reported by an authoritative source (the “Option Price”). The number of shares of Common Stock that may be received upon the exercise of the Option and the Option Price are subject to adjustment as herein set forth, provided that in no event shall the number of shares of Common Stock for which this Option is exercisable exceed 19.9% of the Issuer’s issued and outstanding shares of Common Stock, before giving effect to the exercise of the Option.

(b) In the event that any additional shares of Common Stock are either (i) issued or otherwise become outstanding after the date of this Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased or otherwise cease to be outstanding after the date of this Agreement, the number of shares of Common Stock subject to the Option shall be increased or decreased, as appropriate, so that after such

adjustment such number equals 19.9% of the number of shares of Common Stock then issued and outstanding, before giving effect to the exercise of the Option. Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or Grantee to breach any provision of the Merger Agreement.

2. Exercise of Option.

(a) The holder of the Option (the “Holder”) may exercise the Option, in whole or part, and from time to time, if both a First Triggering Event (as defined below) and a Second Triggering Event (as defined below) shall have occurred before an Exercise Termination Event (as defined below), provided that the Holder has given written notice of such exercise within 180 days following such Second Triggering Event.

(b) Issuer shall notify Grantee promptly in writing of the occurrence of any First Triggering Event or Second Triggering Event of which it has knowledge, it being understood that the giving of such notice by Issuer shall not be a condition to the right of the Holder to exercise the Option.

(c) In the event the Holder is entitled to and wishes to exercise the Option, it shall send to Issuer a written notice (the date of which is the “Notice Date”) specifying (i) the total number of shares it will purchase pursuant to such exercise and (ii) a place and date not earlier than three business days nor later than 60 business days from the Notice Date for the closing of such purchase (the “Closing Date”); provided that if prior notification to or approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) or any other regulatory agency is required in connection with such purchase, the Holder shall as soon as reasonably practicable file the required notice or application for approval and shall expeditiously process the same, and the period of time that otherwise would run pursuant to this sentence shall run instead from the date on which any required notification periods have expired or been terminated or such approvals have been obtained and any requisite waiting period or periods shall have passed. Any exercise of the Option shall be deemed to occur on the Notice Date relating thereto.

(d) The following terms have the meanings indicated:

“First Triggering Event” shall mean any of the following events or transactions occurring after the date hereof:

(i) Issuer or any of its Subsidiaries (each an “Issuer Subsidiary”), without having received Grantee’s prior written consent, shall have entered into an agreement to engage in an Acquisition Transaction (as defined below) with any person (the term “person” for purposes of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder) other than Grantee or any of its Subsidiaries (each a “Grantee Subsidiary”) or the Board of Directors of Issuer shall have recommended that the stockholders of Issuer approve or accept any Acquisition Transaction with

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any person other than Grantee or a Subsidiary of Grantee. For purposes of this Agreement, “Acquisition Transaction” shall mean (w) a merger, consolidation or share exchange, or any similar transaction, involving Issuer or any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”)) of Issuer, (x) a purchase, lease or other acquisition or assumption of all or a substantial portion of the assets or deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase or other acquisition (including by way of merger, consolidation, share exchange or otherwise) of securities representing 10% or more of the voting power of Issuer, or (z) any substantially similar transaction; provided, that in no event shall any merger, consolidation, purchase or similar transaction that is not entered into in violation of the terms of the Merger Agreement and involves only the Issuer and one or more of its wholly-owned Subsidiaries or only any two or more of such wholly-owned Subsidiaries, be deemed to be an Acquisition Transaction;

(ii) Issuer or any Issuer Subsidiary, without having received Grantee’s prior written consent, shall have authorized, recommended, proposed or publicly announced its intention to authorize, recommend or propose, to engage in an Acquisition Transaction with any person other than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly withdrawn or modified, or publicly announced its intention to withdraw or modify, in any manner adverse to Grantee, its recommendation that the stockholders of Issuer approve the transactions contemplated by the Merger Agreement;

(iii) Any person other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of its business shall have acquired beneficial ownership or the right to acquire beneficial ownership of 10% or more of the outstanding shares of Common Stock (the term “beneficial ownership” for purposes of this Agreement having the meaning assigned thereto in Section 13(d) of the Exchange Act, and the rules and regulations thereunder);

(iv) Any person other than Grantee or any Grantee Subsidiary shall have made a bona fide proposal to Issuer or its stockholders that is public or becomes the subject of public disclosure to engage in an Acquisition Transaction;

(v) After the receipt by Issuer or its stockholders of any bona fide inquiry or proposal (or the bona fide indication of any intention to propose) from a third party to engage in an Acquisition Transaction, Issuer shall have breached any covenant or obligation contained in the Merger Agreement and such breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall not have been cured before the Notice Date; or

(vi) Any person other than Grantee or any Grantee Subsidiary, other than in connection with a transaction to which Grantee has given its prior written consent, shall have filed an application or notice with the Federal Reserve or other federal or state bank regulatory authority, which application or notice has been accepted for processing, for approval to engage in an Acquisition Transaction.

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“Second Triggering Event” shall mean either of the following events or transactions occurring after the date hereof: (i) the acquisition by any person of beneficial ownership of 20% or more of the then outstanding Common Stock; or (ii) the occurrence of the First Triggering Event described in paragraph (i) of the definition thereof, except that the percentage referred to in clause (y) of the definition of Acquisition Transaction shall be 20%.

“Exercise Termination Event” shall mean each of the following: (i) the Effective Date of the Merger; (ii) termination of the Merger Agreement in accordance with the provisions thereof (other than a termination by Grantee pursuant to Section 7.1(d) or pursuant to Section 7.1(c) (unless the breach by Issuer giving rise to such right of termination pursuant to Section 7.1(c) is non-volitional)) if such termination occurs before a First Triggering Event; and (iii) the passage of 18 months after termination of the Merger Agreement if such termination follows a First Triggering Event or is a termination by Grantee pursuant to Section 7.1(d) or pursuant to Section 7.1(c) (unless the breach by Issuer giving rise to such right of termination pursuant to Section 7.1(c) is non-volitional) of the Merger Agreement.

3. Payment and Delivery of Certificates.

(a) At the Closing Date, the Holder shall pay to Issuer the aggregate purchase price for the shares of Common Stock purchased pursuant to the exercise of the Option in immediately available funds by wire transfer to a bank account designated by Issuer.

(b) At such closing, Issuer shall deliver to the Holder a certificate or certificates representing the number of shares of Common Stock purchased by the Holder and, if the Option should be exercised in part only, a new Option evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder, and the Holder shall deliver to Issuer this Agreement and a letter agreeing that the Holder will not offer to sell or otherwise dispose of such shares in violation of applicable law or the provisions of this Agreement. Upon the giving by the Holder to Issuer of the written notice of exercise of the Option and the tender of the applicable purchase price, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise.

(c) Certificates for Common Stock delivered at a closing hereunder may be endorsed with a restrictive legend that shall read substantially as follows:

“The transfer of the shares represented by this certificate is subject to certain provisions of an agreement between the registered holder hereof and Issuer and to resale restrictions arising under the Securities Act of 1933, as amended. A copy of such agreement is on file at the principal office of Issuer and will be provided to the holder hereof without charge upon receipt by Issuer of a written request.”

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It is understood and agreed that the above legend shall be removed by delivery of substitute certificate(s) without such legend if Holder shall have delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel, in form and substance satisfactory to Issuer, to the effect that such legend is not required for purposes of the Securities Act of 1933, as amended (the “Securities Act”).

4. Exchange and Division of Option.

This Agreement and the Option granted hereby are exchangeable, without expense, at the option of the Holder upon presentation and surrender of this Agreement to Issuer for other Agreements providing for Options of different denominations entitling the holder thereof to purchase, on the same terms and subject to the same conditions as are set forth herein, in the aggregate the same number of shares of Common Stock purchasable hereunder, provided that the overall economic impact and intent of this Agreement is preserved. The terms “Agreement” and “Option” as used herein include any Stock Option Agreements and related Options for which this Agreement and the Option granted hereby may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and of reasonably satisfactory indemnification (in the case of loss, theft or destruction), and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date.

5. Adjustment Upon Changes in Capitalization.

In addition to the adjustment in the number of shares of Common Stock that are purchasable upon exercise of the Option pursuant to Section 1 of this Agreement, the number of shares of Common Stock purchasable upon the exercise of the Option and the Option Price shall be subject to adjustment from time to time as provided in this Section 5. In the event of any change in, or distributions in respect of, the Common Stock by reason of stock dividends, split-ups, mergers, recapitalizations, combinations, subdivisions, conversions, exchanges of shares, distributions on or in respect of the Common Stock that would cause an adjustment to the number of shares of VFG Common Stock that each share of FNB Common Stock shall represent the right to receive upon conversion under the terms of the Merger Agreement, or the like, the type and number of shares of Common Stock purchasable upon exercise hereof and the Option Price shall be appropriately adjusted in such manner as shall fully preserve the economic benefits provided hereunder and proper provision shall be made in any agreement governing any such transaction to provide for such proper adjustment and the full satisfaction of the Issuer’s obligations hereunder.

6. Registration Rights.

Upon the occurrence of a Second Triggering Event that occurs before an Exercise Termination Event, Issuer shall, if requested by Grantee within 180 days of such Second Triggering Event, as expeditiously as possible file a registration statement on a form of general use under the Securities Act covering this Option and any shares issued and

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issuable pursuant to this Option and shall use its reasonable best efforts to cause such registration statement to become effective and remain current in order to permit the sale or other disposition of this Option and any shares of Common Stock issued upon total or partial exercise of this Option (“Option Shares”) in accordance with the intended method of sale or other disposition requested by Grantee. Grantee, at its own expense, shall provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. Issuer will use its best efforts to cause such registration statement first to become effective and then to remain effective for such period not in excess of 180 days from the date on which such registration statement first becomes effective as may be reasonably necessary to effect such sales or other dispositions. The first registration effected under this Section 6 shall be at Issuer’s expense except for underwriting commissions and the fees and disbursements of Grantee’s counsel attributable to the registration. A second registration statement may be requested hereunder at Grantee’s expense. In no event shall Issuer be required to effect more than two registrations hereunder. The filing of any registration statement hereunder may be delayed for such period of time as may reasonably be required to facilitate any public distribution by Issuer of its Common Stock. If requested by Grantee, in connection with any such registration, Issuer will become a party to any underwriting agreement relating to the sale of such shares, but only to the extent of obligating itself in respect of representations, warranties, indemnities and other agreements customarily included in such underwriting agreements. Upon receiving any request from Grantee or an assignee of Grantee under this Section 6, Issuer agrees to send a copy thereof to Grantee and to any assignee of Grantee known to Issuer, in each case by promptly mailing the same, postage prepaid, to the address of record of the persons entitled to receive such copies. The request made by Grantee pursuant to this Section 6 may be made on its own behalf or on behalf of any subsequent holder of this Option (or part thereof) or any of the Option Shares.

7. Repurchase of Option and Option Shares by Issuer.

(a) In the event of a Repurchase Event (as defined below), (i) following a request of the Holder delivered before an Exercise Termination Event, Issuer (or any successor thereto) shall repurchase the Option from the Holder immediately after the Repurchase Event at a price (the “Option Repurchase Price”) equal to the product of the number of shares for which this Option may then be exercised multiplied by the amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the Option Price, and (ii)at the request of the owner of Option Shares from time to time (the “Owner”), delivered before an Exercise Termination Event and within 90 days of the occurrence of a Repurchase Event, Issuer (or any successor thereto) shall repurchase immediately after the Repurchase Event such number of the Option Shares from the Owner as the Owner shall designate at a price (the “Option Share Repurchase Price”) equal to the Market/Offer Price multiplied by the number of Option Shares so designated.

(b) The Holder and the Owner, as the case may be, may exercise its right to require Issuer to repurchase the Option and any Option Shares pursuant to this Section 7 by surrendering for such purpose this Agreement or certificates for Option Shares accompanied by a written notice stating that the Holder or the Owner elects to require

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Issuer to repurchase this Option and/or the Option Shares in accordance with the provisions of this Section 7. Within five business days after the surrender of the Option and/or certificates representing Option Shares and the receipt of such notice relating thereto, Issuer shall deliver or cause to be delivered to the Holder the Option Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor or the portion thereof, if any, that Issuer is not then prohibited under applicable law and regulation and Order (as defined below) from so delivering.

(c) If Issuer is prohibited under applicable law or regulation or Order from repurchasing the Option and/or the Option Shares in full, Issuer shall immediately notify the Holder and/or the Owner and thereafter deliver from time to time to the Holder and/or the Owner, as appropriate, the portion of the Option Repurchase Price and the Option Share Repurchase Price, respectively, that it is no longer prohibited from delivering, within five business days after the date on which Issuer is no longer so prohibited; provided, that if Issuer at any time after delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited under applicable law or regulation or Order from delivering to the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the Option Share Repurchase Price, respectively, in full, the Holder or Owner may revoke its notice of repurchase of the Option or the Option Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that portion of the Option Repurchase Price or the Option Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement evidencing the right of the Holder to purchase that number of shares of Common Stock obtained by multiplying the number of shares of Common Stock for which the surrendered Stock Option Agreement was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Option Repurchase Price less the portion thereof theretofore delivered to the Holder and the denominator of which is the Option Repurchase Price, or (B) to the Owner, a certificate for the Option Shares it is then so prohibited from repurchasing. Notwithstanding the above, Issuer hereby undertakes to use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices, in each case as promptly as practicable in order to accomplish, in full, any repurchase contemplated in this Section 7.

(d) The following terms have the meanings indicated:

“Repurchase Event” shall be deemed to have occurred upon the consummation of (i) an Acquisition Transaction, except that the percentage referred to in clause (y) of the definition thereof shall be 50%, or (ii) the acquisition by any person of beneficial ownership of 50% or more of the then outstanding shares of Common Stock.

“Market/Offer Price” shall mean the highest of (i) the price per share of Common Stock at which a tender offer or exchange offer therefor has been made, (ii) the price per share of Common Stock to be paid by any third party pursuant to an agreement with Issuer, (iii) the highest closing price for shares of Common Stock within the six-month period immediately preceding the date the Holder gives notice of the required

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repurchase of this Option or the Owner gives notice of the required repurchase of Option Shares, as the case may be, and (iv) in the event of a sale of Issuer’s assets, the sum of the price paid in such sale for such assets and the current market value of the remaining assets of Issuer as determined by a recognized investment banking firm selected by the Holder or the Owner, as the case may be, and reasonably acceptable to the Issuer, divided by the number of shares of Common Stock of Issuer outstanding at the time of such sale. In determining the Market/Offer Price, the value of consideration other than cash shall be determined by a recognized investment banking firm selected by the Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.

“Order” shall mean any administrative decision, decree, injunction, judgment, order, memorandum, ruling or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency or Governmental Authority.

8. Substitute Option.

(a) If Issuer enters into an agreement before an Exercise Termination Event (i) to consolidate with or merge into any person other than Grantee or one of its Subsidiaries, and shall not be the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person other than Grantee or one of its Subsidiaries to merge into Issuer and Issuer shall be the continuing or surviving corporation, but, in connection with such merger, the then outstanding shares of Common Stock shall be exchanged for stock or other securities of any other person or cash or any other property or the then outstanding shares of Common Stock shall after such merger represent less than 50% of the outstanding voting shares of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person other than Grantee or one of its Subsidiaries, then the agreement governing such transaction shall make proper provision so that the Option shall, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into or exchanged for, an option (the “Substitute Option”), at the election of the Holder, of either the Acquiring Company (as defined below) or any person that controls the Acquiring Company.

(b) The Substitute Option shall have the same terms as the Option. If the terms of the Substitute Option cannot for legal reasons be the same as the Option, such terms shall be as similar as possible and in no event less advantageous to the Holder. The issuer of the Substitute Option shall also enter into an agreement with the then Holder of the Substitute Option in substantially the same form as this Agreement, which shall be applicable to the Substitute Option.

(c) The Substitute Option shall be exercisable for such number of shares of Substitute Common Stock (as defined below) as is equal to the Market/Offer Price multiplied by the number of shares of Common Stock for which the Option is then exercisable, divided by the Average Price (as defined below). The exercise price of the Substitute Option per share of Substitute Common Stock shall then be equal to the Option Price multiplied by a fraction, the numerator of which is the number of shares of Common Stock for which the Option is then exercisable and the denominator of which is the number of shares of Substitute Common Stock for which the Substitute Option is exercisable.

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(d) In no event shall the Substitute Option be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding before exercise of the Substitute Option. If the Substitute Option would be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding before exercise but for this clause (e), the issuer of the Substitute Option (the “Substitute Option Issuer”) shall make a cash payment to Holder equal to the excess of (i) the value of the Substitute Option without giving effect to the limitation in this clause (d) over (ii) the value of the Substitute Option after giving effect to the limitation in this clause (d). This difference in value shall be determined by a recognized investment banking firm selected by the Holder and reasonably acceptable to the Acquiring Company.

(e) Issuer shall not enter into any transaction described in subsection (a) of this Section 8 unless the Acquiring Company and any person that controls the Acquiring Company assume in writing all the obligations of Issuer hereunder.

(f) The following terms have the meanings indicated:

“Acquiring Company” shall mean (i) the continuing or surviving person of a consolidation or merger with Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving person, and (iii) the transferee of all or substantially all of Issuer’s assets.

“Substitute Common Stock” shall mean the common stock issued by the issuer of the Substitute Option upon exercise thereof.

“Average Price” shall mean the average closing price of a share of the Substitute Common Stock for the one year immediately preceding the consolidation, merger or sale in question, but in no event higher than the closing price of the shares of Substitute Common Stock on the day preceding such consolidation, merger or sale; provided that if Issuer is the issuer of the Substitute Option, the Average Price shall be computed with respect to a share of common stock issued by the person merging into Issuer or by any company which controls or is controlled by such person, as the Holder may elect.

9. Repurchase of Substitute Option and Substitute Shares.

(a) At the request of the holder of the Substitute Option (the “Substitute Option Holder”), the Substitute Option Issuer shall repurchase the Substitute Option from the Substitute Option Holder at a price (the “Substitute Option Repurchase Price”) equal to the amount by which (i) the Highest Closing Price (as defined below) exceeds (ii) the exercise price of the Substitute Option, multiplied by the number of shares of Substitute Common Stock for which the Substitute Option may then be exercised. At the request of the owner (the “Substitute Share Owner”) of shares of Substitute Common Stock (the “Substitute

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Shares”), the Substitute Option Issuer shall repurchase the Substitute Shares at a price (the “Substitute Share Repurchase Price”) equal to the Highest Closing Price multiplied by the number of Substitute Shares so designated. The term “Highest Closing Price” shall mean the highest closing price for shares of Substitute Common Stock within the six-month period immediately preceding the date the Substitute Option Holder gives notice of the required repurchase of the Substitute Option or the Substitute Share Owner gives notice of the required repurchase of the Substitute Shares.

(b) The Substitute Option Holder and the Substitute Share Owner, as the case may be, may exercise its right to require the Substitute Option Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to this Section 9 by surrendering for such purpose to the Substitute Option Issuer the agreement for such Substitute Option (or, in the absence of such an agreement, a copy of this Agreement) and certificates for Substitute Shares accompanied by a written notice stating that the Substitute Option Holder or the Substitute Share Owner elects to require the Substitute Option Issuer to repurchase the Substitute Option and/or the Substitute Shares in accordance with the provisions of this Section 9. Within five business days after the surrender of the Substitute Option and/or certificates representing Substitute Shares and the receipt of such notice relating thereto, the Substitute Option Issuer shall deliver or cause to be delivered to the Substitute Option Holder the Substitute Option Repurchase Price and/or to the Substitute Share Owner the Substitute Share Repurchase Price therefor or the portion thereof, if any, that the Substitute Option Issuer is not then prohibited under applicable law and regulation and Order from so delivering.

(c) If the Substitute Option Issuer is prohibited under applicable law or regulation or Order from repurchasing the Substitute Option and/or the Substitute Shares in part or in full, the Substitute Option Issuer shall immediately notify the Substitute Option Holder and/or the Substitute Share Owner and thereafter deliver from time to time to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the portion of the Substitute Option Repurchase Price and the Substitute Share Repurchase Price, respectively, which it is no longer prohibited from delivering, within five business days after the date on which the Substitute Option Issuer is no longer so prohibited; provided, that if the Substitute Option Issuer at any time after delivery of a notice of repurchase pursuant to subsection (b) of this Section 9 is prohibited under applicable law or regulation or Order from delivering to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option Repurchase Price and the Substitute Share Repurchase Price, respectively, in full, the Substitute Option Holder or Substitute Share Owner may revoke its notice of repurchase of the Substitute Option or the Substitute Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner, as appropriate, that portion of the Substitute Option Repurchase Price or the Substitute Share Repurchase Price that the Substitute Option Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new Substitute Option evidencing the right of the Substitute Option Holder to purchase that number of shares of the Substitute Common Stock obtained by multiplying the number of shares of the Substitute Common Stock for which the

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surrendered Substitute Option was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Substitute Option Repurchase Price less the portion thereof theretofore delivered to the Substitute Option Holder and the denominator of which is the Substitute Option Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the Substitute Common Stock it is then so prohibited from repurchasing. Notwithstanding the above, the Substitute Option Issuer shall use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices, in each case as promptly as practicable in order to accomplish, in full, any repurchase contemplated in this Section 9.

10. Extension of Periods.

The 90-day or 180-day periods for exercise of certain rights under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all regulatory approvals for the exercise of such rights and for the expiration of all statutory waiting periods; (ii) to the extent necessary to avoid liability under Section 16(b) of the Exchange Act by reason of such exercise; and (iii) when there exists an Order that prohibits or delays exercise of such right.

11. Representations of Issuer.

Issuer hereby represents, warrants and covenants to Grantee as follows:

(a) Issuer shall at all times maintain sufficient authorized but unissued shares of Common Stock so that the Option may be exercised without authorization of additional shares of Common Stock.

(b) The shares to be issued upon due exercise, in whole or in part, of the Option, when paid for as provided herein, will be duly authorized, validly issued, fully paid and nonassessable.

(c) The Board of Directors of Issuer has approved this Agreement and the transactions contemplated hereby and taken any other action as required to render inapplicable to such agreement and transactions Sections 13.1-725 through 13.1-728 and 13.1-728.1 through 13.1-728.9 of the VSCA and, to the knowledge of Issuer, any similar Takeover Laws.

12. Representations of Grantee.

Grantee hereby represents and warrants to Issuer that any shares acquired by Grantee upon exercise of the Option will not be acquired with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act.

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13. Assignment.

Neither of the parties hereto may assign any of its rights or obligations under this Agreement or the Option created hereunder to any other person, without the express written consent of the other party, except that in the event a Second Triggering Event shall have occurred before an Exercise Termination Event, Grantee, subject to the express provisions hereof, may assign in whole or in part its rights and obligations hereunder within 180 days following such Second Triggering Event; provided, that until the date 15 days following the date on which the Federal Reserve approves an application by Grantee or its transferee to acquire the shares of Common Stock subject to the Option, Grantee may not assign its rights under this Agreement or the Option created hereunder except in (i) connection with a widely dispersed public distribution, (ii) a private placement in which no one party acquires the right to purchase in excess of 2% of the voting shares of Issuer, or (iii) any other manner approved by the Federal Reserve. Upon any such assignment, the transferee shall be deemed to be the “Grantee” for purposes of the Option so transferred.

14. Filings, Etc.

Each of Grantee and Issuer will use its best efforts to make all filings with, and to obtain consents of, all third parties and governmental authorities necessary to the consummation of the transactions contemplated by this Agreement, including without limitation making application to list the shares of Common Stock issuable hereunder on the Nasdaq Global Select Market upon official notice of issuance upon official notice of issuance and applying to the Federal Reserve under the Bank Holding Company Act of 1956, as amended, for approval to acquire the shares issuable hereunder, but Grantee shall not be obligated to apply to state banking authorities for approval to acquire the shares of Common Stock issuable hereunder until such time, if ever, as it deems appropriate to do so.

15. Surrender of Option and Option Shares.

(a) At any time during which Issuer would be required to repurchase the Option or any Option Shares pursuant to Section 7, Grantee may, upon proper request or notice, surrender the Option (together with any Option Shares then owned by Grantee) to Issuer in exchange for a cash fee equal to the Surrender Price (as defined below); provided, however, that Grantee may not exercise its rights pursuant to this Section 15 if Issuer has repurchased the Option (or any portion thereof) or any Option Shares pursuant to Section 7. The “Surrender Price” shall be equal to (i) $5,500,000, plus (ii) if applicable, the aggregate purchase price previously paid by Grantee with respect to any Option Shares, minus (iii) if applicable, the sum of (A) the excess of (1) the net cash amounts, if any, received by Grantee pursuant to the arms’ length sale of Option Shares to any party not affiliated with Grantee, over (2) the aggregate purchase price previously paid by Grantee with respect to such Option Shares and (B) the net cash amounts, if any, received by Grantee pursuant to an arms’ length sale of a portion of the Option to any party not affiliated with Grantee.

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(b) Grantee may exercise its right to surrender the Option and any Option Shares pursuant to this Section 15 by surrendering to Issuer this Agreement together with certificates for Option Shares, if any, accompanied by a written notice stating (i) that Grantee elects to surrender the Option and Option Shares, if any, in accordance with the provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price shall be payable in immediately available funds on or before the second business day following receipt of such notice by Issuer.

(c) If Issuer is prohibited under applicable law or regulation or Order from paying the Surrender Price to Grantee in full, Issuer shall immediately notify Grantee and thereafter deliver from time to time to Grantee the portion of the Surrender Price that Issuer is no longer prohibited from paying, within five business days after the date on which Issuer is no longer so prohibited, provided, that if Issuer at any time after delivery of a notice of surrender pursuant to paragraph (b) of this Section 15 is prohibited under applicable law or regulation or Order from paying to Grantee the Surrender Price in full (i) Issuer shall (A) use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices as promptly as practicable in order to make such payments, (B) within five days of the submission or receipt of any documents relating to any such regulatory and legal approvals, provide Grantee with copies of the same, and (C) keep Grantee advised of both the status of any such request for regulatory and legal approvals, as well as any discussions with any relevant regulatory or other third party reasonably related to the same and (ii) Grantee may revoke such notice of surrender by delivery of a notice of revocation to Issuer and, upon delivery of such notice of revocation, the Exercise Termination Date shall be extended to a date six months from the date on which the Exercise Termination Date would have occurred if not for the provisions of this Section 15(c) (during which period Grantee may exercise any of its rights hereunder, including any and all rights pursuant to this Section 15).

(d) Grantee shall have rights substantially identical to those set forth in this Section 15 with respect to the Substitute Option and the Substitute Option Issuer during any period in which the Substitute Option Issuer would be required to repurchase the Substitute Option pursuant to Section 9.

16. Limit on Grantee Profit.

(a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee’s Total Profit (as defined below) exceed $11,750,000 and, if it otherwise would exceed such amount, the Grantee, at its sole election, shall (i) reduce the number of shares of Common Stock subject to this Option, (ii) deliver to Issuer for cancellation Option Shares previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any combination thereof, so that Grantee’s actually realized Total Profit shall not exceed $11,750,000 after taking into account the foregoing actions.

(b) Notwithstanding any other provision of this Agreement, this Option may not be exercised for a number of shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) of more than $11,750,000; provided that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any date subsequent to such initial date of exercise.

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(c) The following terms have the meanings indicated:

“Total Profit” shall mean the aggregate amount, before taxes, of the following: (i) the amount received by Grantee pursuant to Issuer’s repurchase of the Option, or any portion thereof, (ii) the amount received by Grantee pursuant to Issuer’s repurchase of Option Shares, less the purchase price for such Option Shares, (iii) the net cash amounts received by Grantee pursuant to the sale of Option Shares to any unaffiliated party, less Grantee’s purchase price of such Option Shares, (iv) any amounts received by Grantee on the transfer of the Option, or any portion thereof, to any unaffiliated party, and (v) any amount equivalent to the foregoing with respect to the Substitute Option.

“Notional Total Profit” with respect to any number of shares as to which Grantee may propose to exercise this Option shall be the Total Profit determined as of the date of such proposed exercise assuming that this Option were exercised on such date for such number of shares and assuming that such shares, together with all other Option Shares held by Grantee as of such date, were sold for cash at the closing market price for the Common Stock as of the close of business on the preceding trading day.

17. Transfer Restrictions.

The parties hereto acknowledge and agree that the transfer of this Agreement is subject to certain provisions contained herein and to resale restrictions under the Securities Act.

18. Specific Performance.

The parties agree that damages would be an inadequate remedy for a breach of the provisions of this Agreement by either party hereto and that this Agreement may be enforceable by either party hereto through injunctive or other equitable relief.

19. Severability.

If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated. If for any reason such court or regulatory agency determines that the Holder is not permitted to acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the full number of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to acquire or to require Issuer to repurchase such lesser number of shares as may be permissible, without any amendment or modification hereof.

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20. Notices.

All notices or other communications that are required or permitted hereunder shall be in writing and sufficient if delivered in the manner and to the address provided for in or pursuant to Section 8.5 of the Merger Agreement.

21. Governing Law.

This Option Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to the conflicts of laws principles thereof.

22. Counterparts.

This Option Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

23. Expenses.

Except as otherwise provided herein, each of the parties hereto shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants and counsel.

24. Entire Agreement; Third Party Rights.

Except as otherwise expressly provided herein or in the Merger Agreement, this Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect thereof, written or oral. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

25. Defined Terms.

Capitalized terms used but not defined herein and defined in the Merger Agreement shall have the same meanings as in the Merger Agreement.

[Signatures on following page]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the date first above written.

VIRGINIA FINANCIAL GROUP, INC.
By:	/s/ O. R. Barham, Jr.
	O. R. Barham, Jr.
	President and Chief Executive Officer
FNB CORPORATION
By:	/s/ William P. Heath, Jr.
	William P. Heath, Jr.
	President and Chief Executive Officer

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EX-99.2

Exhibit 99.2

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (the “Agreement”), dated as of July 26, 2007, between FNB CORPORATION, a Virginia corporation (“Issuer”), and VIRGINIA FINANCIAL GROUP, INC., a Virginia corporation (“Grantee”).

WITNESSETH

WHEREAS, the Boards of Directors of Grantee and Issuer have approved the strategic business affiliation of their companies through the merger of Grantee and Issuer (the “Merger”) pursuant to the terms and conditions of an Agreement and Plan of Reorganization, dated July 26, 2007, and a related Plan of Merger (together referred to herein as the “Merger Agreement”), which agreement was executed and delivered immediately before the execution and delivery of this Agreement;

WHEREAS, as a condition to and as consideration for Grantee’s entering into the Merger Agreement, Issuer has agreed to grant Grantee the Option (as defined below); and

WHEREAS, in connection with entering into the Merger Agreement, Grantee has issued the Issuer an option pursuant to a Stock Option Agreement in the form attached to the Merger Agreement.

NOW, THEREFORE, in consideration of the premises contained herein and in the Merger Agreement, the parties hereto agree as follows:

1. Grant of Option.

(a) Subject to the terms and conditions set forth herein, Issuer hereby grants to Grantee an irrevocable option (the “Option”) to purchase up to 1,468,591 shares of Issuer’s common stock, par value $5.00 per share (“Common Stock”), at a price equal to the lesser of (i) $31.29 per share or (ii) the closing sale price of the Common Stock on the Nasdaq Global Select Market on the trading day immediately preceding the exercise date, as reported by an authoritative source (the “Option Price”). The number of shares of Common Stock that may be received upon the exercise of the Option and the Option Price are subject to adjustment as herein set forth, provided that in no event shall the number of shares of Common Stock for which this Option is exercisable exceed 19.9% of the Issuer’s issued and outstanding shares of Common Stock, before giving effect to the exercise of the Option.

(b) In the event that any additional shares of Common Stock are either (i) issued or otherwise become outstanding after the date of this Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased or otherwise cease to be outstanding after the date of this Agreement, the number of shares of Common Stock subject to the Option shall be increased or decreased, as appropriate, so that after such adjustment such number equals 19.9% of the number of shares of Common Stock then issued and outstanding, before giving effect to the exercise of the Option. Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or Grantee to breach any provision of the Merger Agreement.

2. Exercise of Option.

(a) The holder of the Option (the “Holder”) may exercise the Option, in whole or part, and from time to time, if both a First Triggering Event (as defined below) and a Second Triggering Event (as defined below) shall have occurred before an Exercise Termination Event (as defined below), provided that the Holder has given written notice of such exercise within 180 days following such Second Triggering Event.

(b) Issuer shall notify Grantee promptly in writing of the occurrence of any First Triggering Event or Second Triggering Event of which it has knowledge, it being understood that the giving of such notice by Issuer shall not be a condition to the right of the Holder to exercise the Option.

(c) In the event the Holder is entitled to and wishes to exercise the Option, it shall send to Issuer a written notice (the date of which is the “Notice Date”) specifying (i) the total number of shares it will purchase pursuant to such exercise and (ii) a place and date not earlier than three business days nor later than 60 business days from the Notice Date for the closing of such purchase (the “Closing Date”); provided that if prior notification to or approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) or any other regulatory agency is required in connection with such purchase, the Holder shall as soon as reasonably practicable file the required notice or application for approval and shall expeditiously process the same, and the period of time that otherwise would run pursuant to this sentence shall run instead from the date on which any required notification periods have expired or been terminated or such approvals have been obtained and any requisite waiting period or periods shall have passed. Any exercise of the Option shall be deemed to occur on the Notice Date relating thereto.

(d) The following terms have the meanings indicated:

“First Triggering Event” shall mean any of the following events or transactions occurring after the date hereof:

(i) Issuer or any of its Subsidiaries (each an “Issuer Subsidiary”), without having received Grantee’s prior written consent, shall have entered into an agreement to engage in an Acquisition Transaction (as defined below) with any person (the term “person” for purposes of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder) other than Grantee or any of its Subsidiaries (each a “Grantee Subsidiary”) or the Board of Directors of Issuer shall have recommended that the stockholders of Issuer approve or accept any Acquisition Transaction with any person other than Grantee or a Subsidiary of Grantee. For purposes of this Agreement, “Acquisition Transaction” shall mean (w) a merger, consolidation or

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share exchange, or any similar transaction, involving Issuer or any Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”)) of Issuer, (x) a purchase, lease or other acquisition or assumption of all or a substantial portion of the assets or deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase or other acquisition (including by way of merger, consolidation, share exchange or otherwise) of securities representing 10% or more of the voting power of Issuer, or (z) any substantially similar transaction; provided, that in no event shall any merger, consolidation, purchase or similar transaction that is not entered into in violation of the terms of the Merger Agreement and involves only the Issuer and one or more of its wholly-owned Subsidiaries or only any two or more of such wholly-owned Subsidiaries, be deemed to be an Acquisition Transaction;

(ii) Issuer or any Issuer Subsidiary, without having received Grantee’s prior written consent, shall have authorized, recommended, proposed or publicly announced its intention to authorize, recommend or propose, to engage in an Acquisition Transaction with any person other than Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall have publicly withdrawn or modified, or publicly announced its intention to withdraw or modify, in any manner adverse to Grantee, its recommendation that the stockholders of Issuer approve the transactions contemplated by the Merger Agreement;

(iii) Any person other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of its business shall have acquired beneficial ownership or the right to acquire beneficial ownership of 10% or more of the outstanding shares of Common Stock (the term “beneficial ownership” for purposes of this Agreement having the meaning assigned thereto in Section 13(d) of the Exchange Act, and the rules and regulations thereunder);

(iv) Any person other than Grantee or any Grantee Subsidiary shall have made a bona fide proposal to Issuer or its stockholders that is public or becomes the subject of public disclosure to engage in an Acquisition Transaction;

(v) After the receipt by Issuer or its stockholders of any bona fide inquiry or proposal (or the bona fide indication of any intention to propose) from a third party to engage in an Acquisition Transaction, Issuer shall have breached any covenant or obligation contained in the Merger Agreement and such breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall not have been cured before the Notice Date; or

(vi) Any person other than Grantee or any Grantee Subsidiary, other than in connection with a transaction to which Grantee has given its prior written consent, shall have filed an application or notice with the Federal Reserve or other federal or state bank regulatory authority, which application or notice has been accepted for processing, for approval to engage in an Acquisition Transaction.

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“Second Triggering Event” shall mean either of the following events or transactions occurring after the date hereof: (i) the acquisition by any person of beneficial ownership of 20% or more of the then outstanding Common Stock; or (ii) the occurrence of the First Triggering Event described in paragraph (i) of the definition thereof, except that the percentage referred to in clause (y) of the definition of Acquisition Transaction shall be 20%.

“Exercise Termination Event” shall mean each of the following: (i) the Effective Date of the Merger; (ii) termination of the Merger Agreement in accordance with the provisions thereof (other than a termination by Grantee pursuant to Section 7.1(d) or pursuant to Section 7.1(c) (unless the breach by Issuer giving rise to such right of termination pursuant to Section 7.1(c) is non-volitional)) if such termination occurs before a First Triggering Event; and (iii) the passage of 18 months after termination of the Merger Agreement if such termination follows a First Triggering Event or is a termination by Grantee pursuant to Section 7.1(d) or pursuant to Section 7.1(c) (unless the breach by Issuer giving rise to such right of termination pursuant to Section 7.1(c) is non-volitional) of the Merger Agreement.

3. Payment and Delivery of Certificates.

(a) At the Closing Date, the Holder shall pay to Issuer the aggregate purchase price for the shares of Common Stock purchased pursuant to the exercise of the Option in immediately available funds by wire transfer to a bank account designated by Issuer.

(b) At such closing, Issuer shall deliver to the Holder a certificate or certificates representing the number of shares of Common Stock purchased by the Holder and, if the Option should be exercised in part only, a new Option evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder, and the Holder shall deliver to Issuer this Agreement and a letter agreeing that the Holder will not offer to sell or otherwise dispose of such shares in violation of applicable law or the provisions of this Agreement. Upon the giving by the Holder to Issuer of the written notice of exercise of the Option and the tender of the applicable purchase price, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise.

(c) Certificates for Common Stock delivered at a closing hereunder may be endorsed with a restrictive legend that shall read substantially as follows:

“The transfer of the shares represented by this certificate is subject to certain provisions of an agreement between the registered holder hereof and Issuer and to resale restrictions arising under the Securities Act of 1933, as amended. A copy of such agreement is on file at the principal office of Issuer and will be provided to the holder hereof without charge upon receipt by Issuer of a written request.”

It is understood and agreed that the above legend shall be removed by delivery of substitute certificate(s) without such legend if Holder shall have delivered to Issuer a copy

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of a letter from the staff of the SEC, or an opinion of counsel, in form and substance satisfactory to Issuer, to the effect that such legend is not required for purposes of the Securities Act of 1933, as amended (the “Securities Act”).

4. Exchange and Division of Option.

This Agreement and the Option granted hereby are exchangeable, without expense, at the option of the Holder upon presentation and surrender of this Agreement to Issuer for other Agreements providing for Options of different denominations entitling the holder thereof to purchase, on the same terms and subject to the same conditions as are set forth herein, in the aggregate the same number of shares of Common Stock purchasable hereunder, provided that the overall economic impact and intent of this Agreement is preserved. The terms “Agreement” and “Option” as used herein include any Stock Option Agreements and related Options for which this Agreement and the Option granted hereby may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and of reasonably satisfactory indemnification (in the case of loss, theft or destruction), and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date.

5. Adjustment Upon Changes in Capitalization.

In addition to the adjustment in the number of shares of Common Stock that are purchasable upon exercise of the Option pursuant to Section 1 of this Agreement, the number of shares of Common Stock purchasable upon the exercise of the Option and the Option Price shall be subject to adjustment from time to time as provided in this Section 5. In the event of any change in, or distributions in respect of, the Common Stock by reason of stock dividends, split-ups, mergers, recapitalizations, combinations, subdivisions, conversions, exchanges of shares, distributions on or in respect of the Common Stock that would cause an adjustment to the number of shares of VFG Common Stock that each share of FNB Common Stock shall represent the right to receive upon conversion under the terms of the Merger Agreement, or the like, the type and number of shares of Common Stock purchasable upon exercise hereof and the Option Price shall be appropriately adjusted in such manner as shall fully preserve the economic benefits provided hereunder and proper provision shall be made in any agreement governing any such transaction to provide for such proper adjustment and the full satisfaction of the Issuer’s obligations hereunder.

6. Registration Rights.

Upon the occurrence of a Second Triggering Event that occurs before an Exercise Termination Event, Issuer shall, if requested by Grantee within 180 days of such Second Triggering Event, as expeditiously as possible file a registration statement on a form of general use under the Securities Act covering this Option and any shares issued and issuable pursuant to this Option and shall use its reasonable best efforts to cause such registration statement to become effective and remain current in order to permit the sale or

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other disposition of this Option and any shares of Common Stock issued upon total or partial exercise of this Option (“Option Shares”) in accordance with the intended method of sale or other disposition requested by Grantee. Grantee, at its own expense, shall provide all information reasonably requested by Issuer for inclusion in any registration statement to be filed hereunder. Issuer will use its best efforts to cause such registration statement first to become effective and then to remain effective for such period not in excess of 180 days from the date on which such registration statement first becomes effective as may be reasonably necessary to effect such sales or other dispositions. The first registration effected under this Section 6 shall be at Issuer’s expense except for underwriting commissions and the fees and disbursements of Grantee’s counsel attributable to the registration. A second registration statement may be requested hereunder at Grantee’s expense. In no event shall Issuer be required to effect more than two registrations hereunder. The filing of any registration statement hereunder may be delayed for such period of time as may reasonably be required to facilitate any public distribution by Issuer of its Common Stock. If requested by Grantee, in connection with any such registration, Issuer will become a party to any underwriting agreement relating to the sale of such shares, but only to the extent of obligating itself in respect of representations, warranties, indemnities and other agreements customarily included in such underwriting agreements. Upon receiving any request from Grantee or an assignee of Grantee under this Section 6, Issuer agrees to send a copy thereof to Grantee and to any assignee of Grantee known to Issuer, in each case by promptly mailing the same, postage prepaid, to the address of record of the persons entitled to receive such copies. The request made by Grantee pursuant to this Section 6 may be made on its own behalf or on behalf of any subsequent holder of this Option (or part thereof) or any of the Option Shares.

7. Repurchase of Option and Option Shares by Issuer.

(a) In the event of a Repurchase Event (as defined below), (i) following a request of the Holder delivered before an Exercise Termination Event, Issuer (or any successor thereto) shall repurchase the Option from the Holder immediately after the Repurchase Event at a price (the “Option Repurchase Price”) equal to the product of the number of shares for which this Option may then be exercised multiplied by the amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the Option Price, and (ii)at the request of the owner of Option Shares from time to time (the “Owner”), delivered before an Exercise Termination Event and within 90 days of the occurrence of a Repurchase Event, Issuer (or any successor thereto) shall repurchase immediately after the Repurchase Event such number of the Option Shares from the Owner as the Owner shall designate at a price (the “Option Share Repurchase Price”) equal to the Market/Offer Price multiplied by the number of Option Shares so designated.

(b) The Holder and the Owner, as the case may be, may exercise its right to require Issuer to repurchase the Option and any Option Shares pursuant to this Section 7 by surrendering for such purpose this Agreement or certificates for Option Shares accompanied by a written notice stating that the Holder or the Owner elects to require Issuer to repurchase this Option and/or the Option Shares in accordance with the provisions of this Section 7. Within five business days after the surrender of the Option

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and/or certificates representing Option Shares and the receipt of such notice relating thereto, Issuer shall deliver or cause to be delivered to the Holder the Option Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor or the portion thereof, if any, that Issuer is not then prohibited under applicable law and regulation and Order (as defined below) from so delivering.

(c) If Issuer is prohibited under applicable law or regulation or Order from repurchasing the Option and/or the Option Shares in full, Issuer shall immediately notify the Holder and/or the Owner and thereafter deliver from time to time to the Holder and/or the Owner, as appropriate, the portion of the Option Repurchase Price and the Option Share Repurchase Price, respectively, that it is no longer prohibited from delivering, within five business days after the date on which Issuer is no longer so prohibited; provided, that if Issuer at any time after delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited under applicable law or regulation or Order from delivering to the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the Option Share Repurchase Price, respectively, in full, the Holder or Owner may revoke its notice of repurchase of the Option or the Option Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that portion of the Option Repurchase Price or the Option Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement evidencing the right of the Holder to purchase that number of shares of Common Stock obtained by multiplying the number of shares of Common Stock for which the surrendered Stock Option Agreement was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Option Repurchase Price less the portion thereof theretofore delivered to the Holder and the denominator of which is the Option Repurchase Price, or (B) to the Owner, a certificate for the Option Shares it is then so prohibited from repurchasing. Notwithstanding the above, Issuer hereby undertakes to use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices, in each case as promptly as practicable in order to accomplish, in full, any repurchase contemplated in this Section 7.

(d) The following terms have the meanings indicated:

“Repurchase Event” shall be deemed to have occurred upon the consummation of (i) an Acquisition Transaction, except that the percentage referred to in clause (y) of the definition thereof shall be 50%, or (ii) the acquisition by any person of beneficial ownership of 50% or more of the then outstanding shares of Common Stock.

“Market/Offer Price” shall mean the highest of (i) the price per share of Common Stock at which a tender offer or exchange offer therefor has been made, (ii) the price per share of Common Stock to be paid by any third party pursuant to an agreement with Issuer, (iii) the highest closing price for shares of Common Stock within the six-month period immediately preceding the date the Holder gives notice of the required repurchase of this Option or the Owner gives notice of the required repurchase of Option Shares, as the case may be, and (iv) in the event of a sale of Issuer’s assets, the sum of the

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price paid in such sale for such assets and the current market value of the remaining assets of Issuer as determined by a recognized investment banking firm selected by the Holder or the Owner, as the case may be, and reasonably acceptable to the Issuer, divided by the number of shares of Common Stock of Issuer outstanding at the time of such sale. In determining the Market/Offer Price, the value of consideration other than cash shall be determined by a recognized investment banking firm selected by the Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.

“Order” shall mean any administrative decision, decree, injunction, judgment, order, memorandum, ruling or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency or Governmental Authority.

8. Substitute Option.

(a) If Issuer enters into an agreement before an Exercise Termination Event (i) to consolidate with or merge into any person other than Grantee or one of its Subsidiaries, and shall not be the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person other than Grantee or one of its Subsidiaries to merge into Issuer and Issuer shall be the continuing or surviving corporation, but, in connection with such merger, the then outstanding shares of Common Stock shall be exchanged for stock or other securities of any other person or cash or any other property or the then outstanding shares of Common Stock shall after such merger represent less than 50% of the outstanding voting shares of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person other than Grantee or one of its Subsidiaries, then the agreement governing such transaction shall make proper provision so that the Option shall, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into or exchanged for, an option (the “Substitute Option”), at the election of the Holder, of either the Acquiring Company (as defined below) or any person that controls the Acquiring Company.

(b) The Substitute Option shall have the same terms as the Option. If the terms of the Substitute Option cannot for legal reasons be the same as the Option, such terms shall be as similar as possible and in no event less advantageous to the Holder. The issuer of the Substitute Option shall also enter into an agreement with the then Holder of the Substitute Option in substantially the same form as this Agreement, which shall be applicable to the Substitute Option.

(c) The Substitute Option shall be exercisable for such number of shares of Substitute Common Stock (as defined below) as is equal to the Market/Offer Price multiplied by the number of shares of Common Stock for which the Option is then exercisable, divided by the Average Price (as defined below). The exercise price of the Substitute Option per share of Substitute Common Stock shall then be equal to the Option Price multiplied by a fraction, the numerator of which is the number of shares of Common Stock for which the Option is then exercisable and the denominator of which is the number of shares of Substitute Common Stock for which the Substitute Option is exercisable.

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(d) In no event shall the Substitute Option be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding before exercise of the Substitute Option. If the Substitute Option would be exercisable for more than 19.9% of the shares of Substitute Common Stock outstanding before exercise but for this clause (e), the issuer of the Substitute Option (the “Substitute Option Issuer”) shall make a cash payment to Holder equal to the excess of (i) the value of the Substitute Option without giving effect to the limitation in this clause (d) over (ii) the value of the Substitute Option after giving effect to the limitation in this clause (d). This difference in value shall be determined by a recognized investment banking firm selected by the Holder and reasonably acceptable to the Acquiring Company.

(e) Issuer shall not enter into any transaction described in subsection (a) of this Section 8 unless the Acquiring Company and any person that controls the Acquiring Company assume in writing all the obligations of Issuer hereunder.

(f) The following terms have the meanings indicated:

“Acquiring Company” shall mean (i) the continuing or surviving person of a consolidation or merger with Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving person, and (iii) the transferee of all or substantially all of Issuer’s assets.

“Substitute Common Stock” shall mean the common stock issued by the issuer of the Substitute Option upon exercise thereof.

“Average Price” shall mean the average closing price of a share of the Substitute Common Stock for the one year immediately preceding the consolidation, merger or sale in question, but in no event higher than the closing price of the shares of Substitute Common Stock on the day preceding such consolidation, merger or sale; provided that if Issuer is the issuer of the Substitute Option, the Average Price shall be computed with respect to a share of common stock issued by the person merging into Issuer or by any company which controls or is controlled by such person, as the Holder may elect.

9. Repurchase of Substitute Option and Substitute Shares.

(a) At the request of the holder of the Substitute Option (the “Substitute Option Holder”), the Substitute Option Issuer shall repurchase the Substitute Option from the Substitute Option Holder at a price (the “Substitute Option Repurchase Price”) equal to the amount by which (i) the Highest Closing Price (as defined below) exceeds (ii) the exercise price of the Substitute Option, multiplied by the number of shares of Substitute Common Stock for which the Substitute Option may then be exercised. At the request of the owner (the “Substitute Share Owner”) of shares of Substitute Common Stock (the “Substitute Shares”), the Substitute Option Issuer shall repurchase the Substitute Shares at a price (the “Substitute Share Repurchase Price”) equal to the Highest Closing Price multiplied by the number of Substitute Shares so designated. The term “Highest Closing Price” shall mean

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the highest closing price for shares of Substitute Common Stock within the six-month period immediately preceding the date the Substitute Option Holder gives notice of the required repurchase of the Substitute Option or the Substitute Share Owner gives notice of the required repurchase of the Substitute Shares.

(b) The Substitute Option Holder and the Substitute Share Owner, as the case may be, may exercise its right to require the Substitute Option Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to this Section 9 by surrendering for such purpose to the Substitute Option Issuer the agreement for such Substitute Option (or, in the absence of such an agreement, a copy of this Agreement) and certificates for Substitute Shares accompanied by a written notice stating that the Substitute Option Holder or the Substitute Share Owner elects to require the Substitute Option Issuer to repurchase the Substitute Option and/or the Substitute Shares in accordance with the provisions of this Section 9. Within five business days after the surrender of the Substitute Option and/or certificates representing Substitute Shares and the receipt of such notice relating thereto, the Substitute Option Issuer shall deliver or cause to be delivered to the Substitute Option Holder the Substitute Option Repurchase Price and/or to the Substitute Share Owner the Substitute Share Repurchase Price therefor or the portion thereof, if any, that the Substitute Option Issuer is not then prohibited under applicable law and regulation and Order from so delivering.

(c) If the Substitute Option Issuer is prohibited under applicable law or regulation or Order from repurchasing the Substitute Option and/or the Substitute Shares in part or in full, the Substitute Option Issuer shall immediately notify the Substitute Option Holder and/or the Substitute Share Owner and thereafter deliver from time to time to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the portion of the Substitute Option Repurchase Price and the Substitute Share Repurchase Price, respectively, which it is no longer prohibited from delivering, within five business days after the date on which the Substitute Option Issuer is no longer so prohibited; provided, that if the Substitute Option Issuer at any time after delivery of a notice of repurchase pursuant to subsection (b) of this Section 9 is prohibited under applicable law or regulation or Order from delivering to the Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option Repurchase Price and the Substitute Share Repurchase Price, respectively, in full, the Substitute Option Holder or Substitute Share Owner may revoke its notice of repurchase of the Substitute Option or the Substitute Shares either in whole or to the extent of the prohibition, whereupon, in the latter case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner, as appropriate, that portion of the Substitute Option Repurchase Price or the Substitute Share Repurchase Price that the Substitute Option Issuer is not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new Substitute Option evidencing the right of the Substitute Option Holder to purchase that number of shares of the Substitute Common Stock obtained by multiplying the number of shares of the Substitute Common Stock for which the surrendered Substitute Option was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Substitute Option Repurchase Price less the portion thereof theretofore delivered to the Substitute Option Holder and the

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denominator of which is the Substitute Option Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the Substitute Common Stock it is then so prohibited from repurchasing. Notwithstanding the above, the Substitute Option Issuer shall use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices, in each case as promptly as practicable in order to accomplish, in full, any repurchase contemplated in this Section 9.

10. Extension of Periods.

The 90-day or 180-day periods for exercise of certain rights under Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all regulatory approvals for the exercise of such rights and for the expiration of all statutory waiting periods; (ii) to the extent necessary to avoid liability under Section 16(b) of the Exchange Act by reason of such exercise; and (iii) when there exists an Order that prohibits or delays exercise of such right.

11. Representations of Issuer.

Issuer hereby represents, warrants and covenants to Grantee as follows:

(a) Issuer shall at all times maintain sufficient authorized but unissued shares of Common Stock so that the Option may be exercised without authorization of additional shares of Common Stock.

(b) The shares to be issued upon due exercise, in whole or in part, of the Option, when paid for as provided herein, will be duly authorized, validly issued, fully paid and nonassessable.

(c) The Board of Directors of Issuer has approved this Agreement and the transactions contemplated hereby and taken any other action as required to render inapplicable to such agreement and transactions Sections 13.1-725 through 13.1-728 and 13.1-728.1 through 13.1-728.9 of the VSCA and, to the knowledge of Issuer, any similar Takeover Laws.

12. Representations of Grantee.

Grantee hereby represents and warrants to Issuer that any shares acquired by Grantee upon exercise of the Option will not be acquired with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act.

13. Assignment.

Neither of the parties hereto may assign any of its rights or obligations under this Agreement or the Option created hereunder to any other person, without the express written consent of the other party, except that in the event a Second Triggering Event shall

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have occurred before an Exercise Termination Event, Grantee, subject to the express provisions hereof, may assign in whole or in part its rights and obligations hereunder within 180 days following such Second Triggering Event; provided, that until the date 15 days following the date on which the Federal Reserve approves an application by Grantee or its transferee to acquire the shares of Common Stock subject to the Option, Grantee may not assign its rights under this Agreement or the Option created hereunder except in (i) connection with a widely dispersed public distribution, (ii) a private placement in which no one party acquires the right to purchase in excess of 2% of the voting shares of Issuer, or (iii) any other manner approved by the Federal Reserve. Upon any such assignment, the transferee shall be deemed to be the “Grantee” for purposes of the Option so transferred.

14. Filings, Etc.

Each of Grantee and Issuer will use its best efforts to make all filings with, and to obtain consents of, all third parties and governmental authorities necessary to the consummation of the transactions contemplated by this Agreement, including without limitation making application to list the shares of Common Stock issuable hereunder on the Nasdaq Global Select Market upon official notice of issuance upon official notice of issuance and applying to the Federal Reserve under the Bank Holding Company Act of 1956, as amended, for approval to acquire the shares issuable hereunder, but Grantee shall not be obligated to apply to state banking authorities for approval to acquire the shares of Common Stock issuable hereunder until such time, if ever, as it deems appropriate to do so.

15. Surrender of Option and Option Shares.

(a) At any time during which Issuer would be required to repurchase the Option or any Option Shares pursuant to Section 7, Grantee may, upon proper request or notice, surrender the Option (together with any Option Shares then owned by Grantee) to Issuer in exchange for a cash fee equal to the Surrender Price (as defined below); provided, however, that Grantee may not exercise its rights pursuant to this Section 15 if Issuer has repurchased the Option (or any portion thereof) or any Option Shares pursuant to Section 7. The “Surrender Price” shall be equal to (i) $5,500,000, plus (ii) if applicable, the aggregate purchase price previously paid by Grantee with respect to any Option Shares, minus (iii) if applicable, the sum of (A) the excess of (1) the net cash amounts, if any, received by Grantee pursuant to the arms’ length sale of Option Shares to any party not affiliated with Grantee, over (2) the aggregate purchase price previously paid by Grantee with respect to such Option Shares and (B) the net cash amounts, if any, received by Grantee pursuant to an arms’ length sale of a portion of the Option to any party not affiliated with Grantee.

(b) Grantee may exercise its right to surrender the Option and any Option Shares pursuant to this Section 15 by surrendering to Issuer this Agreement together with certificates for Option Shares, if any, accompanied by a written notice stating (i) that Grantee elects to surrender the Option and Option Shares, if any, in accordance with the provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price shall be payable in immediately available funds on or before the second business day following receipt of such notice by Issuer.

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(c) If Issuer is prohibited under applicable law or regulation or Order from paying the Surrender Price to Grantee in full, Issuer shall immediately notify Grantee and thereafter deliver from time to time to Grantee the portion of the Surrender Price that Issuer is no longer prohibited from paying, within five business days after the date on which Issuer is no longer so prohibited, provided, that if Issuer at any time after delivery of a notice of surrender pursuant to paragraph (b) of this Section 15 is prohibited under applicable law or regulation or Order from paying to Grantee the Surrender Price in full (i) Issuer shall (A) use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices as promptly as practicable in order to make such payments, (B) within five days of the submission or receipt of any documents relating to any such regulatory and legal approvals, provide Grantee with copies of the same, and (C) keep Grantee advised of both the status of any such request for regulatory and legal approvals, as well as any discussions with any relevant regulatory or other third party reasonably related to the same and (ii) Grantee may revoke such notice of surrender by delivery of a notice of revocation to Issuer and, upon delivery of such notice of revocation, the Exercise Termination Date shall be extended to a date six months from the date on which the Exercise Termination Date would have occurred if not for the provisions of this Section 15(c) (during which period Grantee may exercise any of its rights hereunder, including any and all rights pursuant to this Section 15).

(d) Grantee shall have rights substantially identical to those set forth in this Section 15 with respect to the Substitute Option and the Substitute Option Issuer during any period in which the Substitute Option Issuer would be required to repurchase the Substitute Option pursuant to Section 9.

16. Limit on Grantee Profit.

(a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee’s Total Profit (as defined below) exceed $11,750,000 and, if it otherwise would exceed such amount, the Grantee, at its sole election, shall (i) reduce the number of shares of Common Stock subject to this Option, (ii) deliver to Issuer for cancellation Option Shares previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any combination thereof, so that Grantee’s actually realized Total Profit shall not exceed $11,750,000 after taking into account the foregoing actions.

(b) Notwithstanding any other provision of this Agreement, this Option may not be exercised for a number of shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) of more than $11,750,000; provided that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any date subsequent to such initial date of exercise.

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(c) The following terms have the meanings indicated:

“Total Profit” shall mean the aggregate amount, before taxes, of the following: (i) the amount received by Grantee pursuant to Issuer’s repurchase of the Option, or any portion thereof, (ii) the amount received by Grantee pursuant to Issuer’s repurchase of Option Shares, less the purchase price for such Option Shares, (iii) the net cash amounts received by Grantee pursuant to the sale of Option Shares to any unaffiliated party, less Grantee’s purchase price of such Option Shares, (iv) any amounts received by Grantee on the transfer of the Option, or any portion thereof, to any unaffiliated party, and (v) any amount equivalent to the foregoing with respect to the Substitute Option.

“Notional Total Profit” with respect to any number of shares as to which Grantee may propose to exercise this Option shall be the Total Profit determined as of the date of such proposed exercise assuming that this Option were exercised on such date for such number of shares and assuming that such shares, together with all other Option Shares held by Grantee as of such date, were sold for cash at the closing market price for the Common Stock as of the close of business on the preceding trading day.

17. Transfer Restrictions.

The parties hereto acknowledge and agree that the transfer of this Agreement is subject to certain provisions contained herein and to resale restrictions under the Securities Act.

18. Specific Performance.

The parties agree that damages would be an inadequate remedy for a breach of the provisions of this Agreement by either party hereto and that this Agreement may be enforceable by either party hereto through injunctive or other equitable relief.

19. Severability.

If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated. If for any reason such court or regulatory agency determines that the Holder is not permitted to acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the full number of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to acquire or to require Issuer to repurchase such lesser number of shares as may be permissible, without any amendment or modification hereof.

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20. Notices.

All notices or other communications that are required or permitted hereunder shall be in writing and sufficient if delivered in the manner and to the address provided for in or pursuant to Section 8.5 of the Merger Agreement.

21. Governing Law.

This Option Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to the conflicts of laws principles thereof.

22. Counterparts.

This Option Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

23. Expenses.

Except as otherwise provided herein, each of the parties hereto shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including fees and expenses of its own financial consultants, investment bankers, accountants and counsel.

24. Entire Agreement; Third Party Rights.

Except as otherwise expressly provided herein or in the Merger Agreement, this Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect thereof, written or oral. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, and their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

25. Defined Terms.

Capitalized terms used but not defined herein and defined in the Merger Agreement shall have the same meanings as in the Merger Agreement.

[Signatures on following page]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the date first above written.

FNB CORPORATION
By:	/s/ William P. Heath, Jr.
	William P. Heath, Jr.
	President and Chief Executive Officer
VIRGINIA FINANCIAL GROUP, INC.
By:	/s/ O. R. Barham, Jr.
	O. R. Barham, Jr.
	President and Chief Executive Officer

16

EX-99.3

Virginia Financial Group, Inc. (VFGI)

and

FNB Corporation (FNBP)

are Combining in a Merger-of-Equals Transaction

July 27, 2007

Caution Regarding Forward-Looking Statements

Statements made in this presentation, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this presentation and are based on current expectations and involve a number of assumptions. These include statements as to the anticipated benefits of the merger, including future financial and operating results, cost savings, enhanced revenues and the accretion to earnings that may be realized from the merger as well as other statements of expectations regarding the merger and any other statements regarding future results or expectations. Each of VFGI and FNBP intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. The companies’ respective abilities to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of each of VFGI and FNBP and the resulting company, include but are not limited to: (1) the businesses of VFGI and/or FNBP may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) customer and employee relationships and business operations may be disrupted by the merger; (5) the ability to obtain required regulatory and shareholder approvals, and the ability to complete the merger on the expected timeframe may be more difficult, time-consuming or costly than expected; (6) changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the companies’ respective market areas; their implementation of new technologies; their ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines; and (7) other risk factors detailed from time to time in filings made by VFGI or FNBP with the SEC. VFGI and FNBP undertake no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Transaction Summary

Transaction Structure: 100% Stock Swap, Merger-of-Equals

Name of New Company: To be determined prior to close

Fixed Exchange Ratio: 1.5850 VFGI Shares for each FNBP share

Pro Forma Ownership: 48% VFGI; 52% FNBP

Board of Directors: Equal representation

Headquarters: Charlottesville, Virginia

Bank/Operations Center: Christiansburg, Virginia

Pro Forma Market Cap.: Approximately $450 Million

Annual Dividend: $0.64 per share ($1.014 per FNBP equiv. share)

Expected Closing: Late 4Q2007

Required Approvals: Shareholder and regulatory approvals

Due Diligence: Completed

Other: Dual 19.9% Lock-up Option

Company Comparison

VFGI FNBP

Balance Sheet

Assets $1,601,153 $1,529,670 Net Loans 1,210,309 1,145,911 Total Deposits 1,277,755 1,275,202 Tangible Equity 135,780 129,094

Last Twelve Months Profitability

ROAA 1.20% 1.14% ROAE 12.96 10.21 Efficiency Ratio 60.41 57.72 Net Interest Margin 4.17 3.95 Non-Int. Income / Avg. Assets 0.98 0.99 Non-Int. Expense / Avg. Assets 2.97 2.74

Market Capitalization ($mm) $220.8 $228.0 Branches: Deposit Branches 40 27 Loan Production Offices 2 2

Notes: Financial Data as of March 31, 2007. Dollars in Thousands

Senior Management Team

Chairman of the Board: Bill Heath (FNBP)

President and CEO: Ed Barham (VFGI)

Chief Financial Officer: Jeff Farrar (VFGI)

Chief Operating Officer: Litz Van Dyke (VFGI)

Bank President: Greg Feldmann (FNBP)

Chairman of Bank Board: Raymond Smoot, Jr. (FNBP)

Transaction Rationale

Creates the largest independent bank headquartered in Virginia

Combines the best banking talent from both VFGI and FNBP

Creates a Wealth Management division with nearly $1 billion of assets under management

Expands presence in the highly attractive Virginia marketplace

Enhances competitive position

Expected to be accretive to Earnings Per Share for both VFGI and FNBP in first full year following close

Increases stock trading liquidity and market capitalization

Significantly improves the possibility that combined company could be included in the Russell 3000 Index in 2008

Pro Forma Franchise

#1—Largest Bank Holding Company Headquartered in Virginia Ranked by Assets

#1—Largest Bank Holding Company Headquartered in Virginia Ranked by Loans

#1—Largest Bank Holding Company Headquartered in Virginia Ranked by Deposits*

#2—Second Most Branches of Any Virginia-Based Bank Holding Company

NOTE: Excludes Capital One Financial Corp, E*Trade Financial Corp, Countrywide Financial Corp., and UNIFI Mutual Holding Co.

* Deposit Data at June 30, 2006 Adjusted for all Pending and Completed Mergers as of 7/19/2007. Dollars in thousands.

Source: SNL Securities

Branch Map

Harrisonburg Culpeper

Staunton

Fredericksburg

Charlottesville

Roanoke

Christiansburg

VFGI

LPO FNBP

LPO

Virginia Deposit Market Share

# of Virginia Market Rank Ticker Company Name City State Branches Deposits * Share

1 WB Wachovia Corp. Charlotte NC 649 $25,465,221 19.97 %

2 BBT BB&T Corp. Winston-Salem NC 686 19,411,042 15.22

3 BAC Bank of America Corp. Charlotte NC 254 16,900,970 13.25

4 STI SunTrust Banks Inc. Atlanta GA 355 14,083,510 11.05

5 C Citigroup Inc. New York NY 9 6,906,541 5.42

6 Pro Forma Combined Company Charlottesville VA 67 2,595,278 2.04

6 PNC PNC Financial Services Group Pittsburgh PA 73 2,346,076 1.84

7 B.F. Saul Company Chevy Chase MD 109 2,287,460 1.79

8 CARE Carter Bank & Trust Martinsville VA 95 2,099,405 1.65

9 UBSI United Bankshares Inc. Charleston WV 61 1,996,530 1.57

10 UBSH Union Bankshares Corp. Bowling Green VA 60 1,663,505 1.30

11 TOWN TowneBank Portsmouth VA 22 1,619,993 1.27

12 VCBI Virginia Commerce Bancorp Inc. Arlington VA 21 1,432,267 1.12

13 VFGI Virginia Financial Group Culpeper VA 40 1,303,200 1.02

14 FNBP FNB Corp. Christiansburg VA 27 1,292,078 1.01

15 BHRB Burke & Herbert Bank & Trust Alexandria VA 16 1,155,366 0.91

16 CFNL Cardinal Financial Corp. McLean VA 26 1,127,857 0.88

17 FCNCA First Citizens BancShares Inc. Raleigh NC 54 1,103,768 0.87

18 Ukrop’s Super Markets Inc. Richmond VA 39 1,004,389 0.79

19 FULT Fulton Financial Corp. Lancaster PA 9 905,814 0.71

20 NKSH National Bankshares Inc. Blacksburg VA 31 746,787 0.59

NOTE: Excludes Capital One Financial Corp, E*Trade Financial Corp, Countrywide Financial Corp., and UNIFI Mutual Holding Co.

* Deposit Data at June 30, 2006 Adjusted for all Pending and Completed Mergers as of 7/19/2007. Dollars in thousands.

Source: SNL Securities

VFGI/FNBP Home Markets Deposit Market Share

# of Virginia Market Rank Ticker Company Name City State Branches Deposits * Share

1 WB Wachovia Corp. Charlotte NC 112 4,142,628 19.83 %

2 BBT BB&T Corp. Winston-Salem NC 156 3,495,023 16.73

3 STI SunTrust Banks Inc. Atlanta GA 90 2,613,592 12.51

4 Pro Forma Combined Company Charlottesville VA 67 2,595,278 12.43

5 BAC Bank of America Corp. Charlotte NC 44 1,924,322 9.21

6 VFGI Virginia Financial Group Culpeper VA 40 1,303,200 6.24

6 FNBP FNB Corp. Christiansburg VA 27 1,292,078 6.19

7 CARE Carter Bank & Trust Martinsville VA 44 819,149 3.92

8 UBSH Union Bankshares Corp. Bowling Green VA 19 663,163 3.17

9 NKSH National Bankshares Inc. Blacksburg VA 16 487,304 2.33

10 UBSI United Bankshares Inc. Charleston WV 15 406,429 1.95

11 FCNCA First Citizens BancShares Inc. Raleigh NC 24 397,779 1.90

12 VYFC Valley Financial Corp. Roanoke VA 8 395,042 1.89

13 PNC PNC Financial Services Group Pittsburgh PA 9 383,241 1.83

14 FMBM F & M Bank Corp. Timberville VA 9 277,422 1.33

15 CFFC Community Financial Corp. Staunton VA 6 226,106 1.08

* Deposit Data at June 30, 2006 Adjusted for all Pending and Completed Mergers as of 7/19/2007. Dollars in thousands.

Data includes all counties where FNBP or VFGI have a branch office. Source: SNL Securities

Overview of Virginia Financial Group, Inc.

Headquartered in Charlottesville, Virginia

Operates two banking subsidiaries, Second Bank & Trust and Planters Bank, with a total of 40 branches

Assets over $1.6 billion, deposits of $1.3 billion and equity of $153 million

#1 Deposit Market Share in four Virginia Counties

5 year EPS Compound Annual Growth Rate of 11.3%

Middle-market commercial banking tradition with three lines of business:

Retail Banking

Commercial Banking

Wealth Management

Market Capitalization: $221 million

Overview of FNB Corporation

Headquartered in Christiansburg, Virginia

Assets of $1.5 billion, deposits of $1.3 billion and equity of $176 million

Through its subsidiary, First National Bank, the Corporation operates 27 full-service branches and 2 loan production offices

#1 Deposit Market Share in four Virginia Counties

Community Bank model with four lines of business:

Retail Banking

Commercial Banking

Private Banking

Wealth Management

Growing financial services niche

Market Capitalization: $228 million

Overview of Combined Company

Creates a Virginia financial services holding company with over $3 billion in assets with strong growth profile

Commercial banking foundation

Strong core deposits

Significant Virginia market presence

#1 deposit market share in 3 of 7 MSAs, top five in 5 of 7

Top five deposit market share in 22 of 32 counties

Geographic diversification of loan portfolio and increased legal lending limit

Growing fee income businesses

Strong capital base

Pro Forma $450 Million Market Capitalization

Enhances strategic position in the merger market arena

Increased opportunity for growth through de novo branching and/or acquisitions

Expected Source of Cost Savings

Personnel $5,761,633

Occupancy / Equipment 326,004

Operations / Technology Reductions 859,679

Corporate / Other 2,501,430

Total (Pre-Tax) $9,448,746

Loan Portfolio

VFGI FNBP

Pro Forma

Commercial R/E Consumer Commercial R/E

Consumer Consumer 20.5% 7.5% 30.3% Commercial R/E 2.6% 5.2% 37.3% C&I

8.1% C&I

9.1%

C&I 8.9% Multifamily 4.5% Multifamily Multifamily 4.4% 0.5% 1-4 Family 36.8% 1-4 Family 1-4 Family Const & Dev 32.7% Const & Dev 26.2% Const & Dev 20.7% 21.4% 18.4%

Other Other Other 2.1% 1.1% 1.7%

Total Loans: Total Loans: Total Loans: $1.23 billion $1.16 billion $2.39 billion Loan/Deposit Ratio: Loan/Deposit Ratio: Loan/Deposit Ratio: 95.8% 90.7% 93.3%

Deposit Base

VFGI FNBP

Pro Forma

MMDA & Savings

MMDA & Savings MMDA & Savings 38.3% Jumbo CDs Jumbo CDs Jumbo CDs 40.7% 43.2% 16.6% 15.2% 15.9%

Transaction

7.2% Transaction Transaction 4.3% 1.5%

Retail CDs Demand

Retail CDs

31.8% Retail CDs 2.0% Demand Demand 34.6% 37.4% 4.4% 6.8%

Total Deposits: Total Deposits: Total Deposits: $1.28 billion $1.28 billion $2.56 billion

Virginia Financial Group, Inc.

Financial Information 2003 2004 2005 2006 Q1 2007 Total Assets $1,387,211 $1,449,608 $1,505,184 $1,625,989 $1,601,153 Total Investment Securities 360,041 286,856 241,032 264,141 259,909 Total Net Loans 918,120 1,055,584 1,138,718 1,210,772 1,210,309 Total Deposits 1,210,774 1,257,164 1,255,509 1,318,281 1,277,755 Total Equity 119,830 127,089 136,105 150,652 153,383 Net Income 13,492 15,203 18,216 19,497 4,018 Earnings Per Share

1.25 1.41 1.68 1.80 0.37

Ratio Analysis

ROAA 1.13 1.07 1.23 1.24 1.00 ROAE 11.47 12.40 13.86 13.57 10.62 Efficiency Ratio 63.02 60.08 59.09 59.58 63.48 Total Equity / Total Assets 8.64 8.77 9.04 9.27 9.58 Loans / Deposits 76.21 84.44 91.04 92.37 95.32

Note: Dollars in Thousands

FNB Corporation

Financial Information 2003 2004 2005 2006 Q1 2007 Total Assets $1,326,811 $1,396,116 $1,481,482 $1,518,715 $1,529,670 Total Investment Securities 193,237 156,732 171,340 189,479 195,253 Total Net Loans 994,108 1,101,210 1,157,102 1,174,642 1,145,911 Total Deposits 1,048,802 1,124,267 1,217,006 1,262,982 1,275,202 Total Equity 141,108 150,001 160,476 173,417 176,339 Net Income 12,932 14,247 17,533 17,912 4,027 Earnings Per Share 2.01 1.95 2.39 2.41 0.54

Ratio Analysis

ROAA 1.14 1.04 1.22 1.19 1.07 ROAE 11.26 9.82 11.35 10.81 9.20 Efficiency Ratio 58.85 56.49 54.89 56.81 58.95 Total Equity / Total Assets 10.64 10.74 10.83 11.42 11.53 Loans / Deposits 95.34 98.15 95.59 92.64 90.15

Note: Dollars in Thousands