8-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K
                                 CURRENT REPORT


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

        Date of Report (Date of Earliest Event Reported) October 5, 2006
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                                 FNB United Corp.
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             (Exact Name of Registrant as Specified in its Charter)


            North Carolina             0-13823             56-1456589
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      (State or Other Jurisdiction   (Commission File    (IRS Employer
          of Incorporation)             Number)         Identification No.)


                101 Sunset Avenue, Asheboro, North Carolina 27203
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               (Address of Principal Executive Offices) (Zip Code)


       Registrant's Telephone Number, Including Area Code (336) 626-8300
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                                       N/A
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          (Former Name or Former Address, if Changed Since Last Report)
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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 Instructions A.2. below):

[ ] 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 8.01.  Other Events.

On October 5, 2006, FNB United Corp. issued a press release, announcing the
restructuring of its investment portfolio. A copy of the press release is
attached as Exhibit 99.1 to this report on Form 8-K and is incorporated herein
by reference.

Item 9.01.  Financial Statements and Exhibits.

Exhibits:

99.1 Press release dated October 5, 2006 announcing the restructuring of FNB
United Corp.'s investment portfolio.

This Current Report on Form 8-K (including information included or incorporated
by reference herein) may contain, among other things, forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including, without limitation, (i) statements regarding certain of FNB United's
goals and expectations regarding earnings, income per share, revenue, expenses
and the growth rate in such items, as well as other measures of economic
performance, including statements relating to estimates of credit quality
trends, and (ii) statements preceded by, followed by or including the words
"may," "could," "should," "would," "believe," "anticipate," "estimate,"
"expect," "intend," "plan," "projects," "outlook" or similar expressions. These
statements are based upon the current belief and expectations of FNB United's
management and are subject to significant risks and uncertainties that are
subject to change based on various factors, many of which are beyond FNB
United's control.




                                           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.

                                            FNB UNITED CORP.


Date: October 5, 2006                    By   /s/ Jerry A. Little
                                           --------------------------------
                                                  Jerry A. Little
                                                  Treasurer and Secretary

EX-99

                                                              Exhibit 99.1


                                                    For Immediate Release
                                                        October 5, 2006
                                                  For Information Contact:
                                              Robert O. Bratton 336-626-8300

[LOGO]    FNB UNITED CORP.
_________________________________________________________
P.O. Box 1328, Asheboro, NC 27204
101 Sunset Avenue, Asheboro, NC 27203


               FNB United Corp. Restructures Investment Portfolio

         Asheboro, N.C. - FNB United Corp. (NASDAQ:FNBN) today announced that it
has restructured its investment portfolio to eliminate certain under-performing
investments and to improve the net interest margin.

         As part of the restructuring, the Company sold approximately $123
million of available for sale securities, or approximately 53% of the total
current carrying value of the investment portfolio, having an estimated
remaining weighted average maturity of 4.1 years and a weighted average yield of
4.59%. The restructuring will result in an estimated loss of $812,500, net of
income taxes, or $.07 per diluted share. This charge will be reflected in the
results of operations for the quarter ended September 30, 2007. The proceeds
will be reinvested in securities with final maturities or average life of 2 to 4
years. The Company estimates the improvement in yield on the total investment
portfolio will be 35 to 40 basis points and will improve annualized diluted
earnings per share by $.05 to $.06. Portions of the liquidated portfolio were
obtained in FNB United's recent acquisitions of United Financial, Inc. and
Integrity Financial Corporation. The repositioning will not have a negative
impact on shareholders' equity as the decline in market value of the investments
is currently reflected in accumulated other comprehensive income, a component of
shareholders' equity.

         Michael C. Miller, Chief Executive Officer, stated, "This strategic
action has been taken to reposition FNB United Corp.'s balance sheet to improve
long-term financial performance and create more value for our shareholders.
While this action will result in a current charge to earnings, we believe the
result will be an improved net interest margin, an improved interest rate risk
position, increased liquidity, and increased profitability that will enhance
shareholder value."

         FNB United Corp. is the central North Carolina-based bank holding
company for First National Bank and Trust Company - including its divisions
First Gaston Bank, Catawba Valley Bank and Northwestern Bank - and Dover
Mortgage Company. Opened in 1907, First National (MyYesBank.com) operates 26
community YES! Banks in Archdale, Asheboro, Biscoe, Burlington, China Grove,
Ellerbe, Graham, Greensboro, Hillsborough, Kannapolis, Laurinburg, Pinehurst,
Ramseur, Randleman, Rockingham, Salisbury, Seagrove, Siler City, Southern Pines
and Trinity. It also operates five community offices as First Gaston Bank
(firstgaston.com) in Belmont, Dallas, Gastonia, Mt. Holly and Stanley; six
community offices as Catawba Valley Bank (catawbavalleybank.com) in Hickory,
Mooresville, Newton and Statesville and six community offices as Northwestern
Bank of Wilkesboro (nwesternbank.com) in Boone, Millers Creek, Taylorsville,
Wilkesboro and West Jefferson. Dover Mortgage Company (dovermortgage.com)
operates 10 mortgage production offices in Carolina Beach, Charlotte, Goldsboro,
Greensboro, Greenville, Lake Norman, Leland, Raleigh, Waxhaw and Wilmington.
Through its subsidiaries, FNB United Corp. offers a complete line of consumer,
mortgage and business banking services, including loan, deposit, cash
management, wealth management and internet banking services. The Federal Deposit
Insurance Corporation insures deposits up to applicable limits.

         This news release contains forward-looking statements. Such statements
are subject to certain factors which may cause the Company's results to vary
from those expected, including the risks set forth from time to time in the
Company's filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's judgment only as of the date hereof. The Company undertakes
no obligation to publicly revise these ford-looking statements to reflect events
and circumstances that arise after the date hereof.

         Factors that might cause such a difference include, but are not limited
to, competition from both financial and non-financial institutions; changes in
interest rates, deposit flows, loan demand and real estate values; changes in
legislation or regulation; changes in accounting principles, policies or
guidelines; changes in the securities markets; the timing and occurrence (or
non-occurrence) of transactions and events that may be subject to circumstances
beyond the control of the Company; and other economic, competitive,
governmental, regulatory and technological factors affecting the Company
specifically or the banking industry or economy generally.

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