Capital Raise, Merger Agreement And Related Matters	6 Months Ended
Jun. 30, 2011
Capital Raise, Merger Agreement And Related Matters
Capital Raise, Merger Agreement And Related Matters	21. Capital Raise, Merger Agreement and Related Matters Merger Agreement with the Bank of Granite and Recapitalization Investment and Subscription Agreements On April 26, 2011, the Company and Bank of Granite Corporation ("Granite"), parent company of Bank of Granite, entered into an agreement and plan of merger (the "Merger Agreement") pursuant to which a wholly owned subsidiary of the Company would, subject to the terms and conditions of the Merger Agreement, merge with and into Granite, with Granite surviving as a subsidiary of the Company (the "Merger"). Upon consummation of the Merger, each outstanding share of Granite's common stock, par value $1.00 per share ("Granite Common Stock"), other than shares held by the Company, Granite or any of their respective wholly owned subsidiaries and other than shares owned in a fiduciary capacity or as a result of debts previously contracted, will be converted into the right to receive 3.375 shares of FNB Common Stock. Also on April 26, 2011 and in connection with the Merger Agreement, the Company entered into separate binding investment agreements (the "Investment Agreements") with Carlyle and Oak Hill Capital (together, the "Anchor Investors") to sell to the Anchor Investors FNB common stock, subject to the terms of the Investment Agreements. The proposed investments are part of an aggregate $310 million capital raise by the Company. Subject to the terms and conditions of the Investment Agreements, each of the Anchor Investors agreed to purchase 484,375,000 shares of FNB common stock at a price of $0.16 per share, or approximately $77.5 million for each of Carlyle and Oak Hill Capital. On June 16, 2011, the Company entered into binding subscription agreements with accredited investors pursuant to which those investors agreed to purchase common stock of the Company, at a purchase price of $0.16 per share, for an aggregate of approximately $75 million as part of the $310 million capital raise. On August 4, 2011, the Company entered into binding subscription agreements with additional accredited investors and amendments to the Investment Agreements and certain of the subscription agreements executed on June 16, 2011 to secure and finalize allocations of the entire proposed $310 million capital raise. As a result of these amendments and new subscription agreements, each Anchor Investor will be investing approximately $79 million and the other investors will invest the remaining approximately $152 million. If the investments are completed, each Anchor Investor will own approximately 23% of the voting equity of the Company after giving effect to the Merger, the investments by the Anchor Investors and the other investors, and the other transactions contemplated to be implemented in connection with such transactions. Each of the other investors will own less than 4.99% of the voting equity of the Company. Issuance of the shares upon the closing of the Investment Agreements and subscription agreements (the "Closing") is subject to a number of conditions, which are set forth in the Investment Agreements and subscription agreements. SunTrust Settlement On August 1, 2011, the Bank and SunTrust Bank entered into an agreement (the "SunTrust Settlement") to settle the $2.5 million in subordinated debt of the Bank held by SunTrust Bank for cash in amount equal to 35% of the principal amount of the debt, plus 100% of the accrued but unpaid interest on the debt as of the closing date of the Merger. The agreement also provides for the Bank's repurchase of the 12.5 million shares of Bank preferred stock owned by SunTrust Bank for cash in an amount equal to 25% of the aggregate liquidation amount of the preferred stock, plus 100% of the accrued but unpaid dividends thereon as of the closing date of the Merger. TARP Exchange The United States Department of the Treasury (the "Treasury") issued a letter, dated April 6, 2011, indicating its agreement to exchange the Company's preferred stock held by the Treasury for the Company's Common Stock having a value equal to the sum of 25% of the aggregate liquidation preference of the preferred stock (i.e., $51.5 million) plus 100% of the amount of accrued and unpaid dividends on the preferred stock as of the closing date (the "TARP Exchange"). In the letter of intent, the Treasury also indicated its intent to adjust its warrant to reduce the warrant exercise price. Deferred Prosecution Agreement The Anchor Investors required that the Investment Agreements include, as a condition to closing, that the Bank resolve a potential claim with the U.S. Attorney for the Western District of North Carolina (the "U.S. Attorney") and the U.S. Department of Justice (the "DOJ") arising from a Grand Jury Subpoena received by the Bank from the U.S. Attorney dated August 11, 2010. The subpoena related to one of the Bank's customers who, at the time of the subpoena, was under indictment for, and was subsequently convicted of, securities fraud, wire fraud and money laundering relating to a suspected Ponzi scheme. The Bank responded in full to the subpoena, which had requested comprehensive documentation related to the Bank's compliance with the Bank Secrecy Act and Anti-Money Laundering ("BSA/AML") laws from January 1, 2005 onward. To facilitate the signing of the Investment Agreements, following discussions with representatives of the U.S. Attorney and the DOJ, the Bank, the U.S. Attorney and the DOJ agreed to enter into a deferred prosecution agreement ("DPA") to settle any potential claims. The DPA was signed on April 26, 2011 and its effectiveness is conditioned on approval of the DPA by the U.S. District Court for the Western District of North Carolina (the "District Court"). Under the terms of the DPA, the DPA will be in effect for 24 months from its effective date and will require the Bank to (1) implement the Office of the Comptroller of the Currency's recommendations relating to the Bank's BSA/AML compliance program, (2) pay on the Closing Date $400,000 to the District Court for distribution to the victims of the fraud perpetrated by the customer, (3) submit to the U.S. Attorney and the DOJ periodic certifications of the Bank's BSA/AML compliance, and (4) strengthen the Bank's BSA/AML compliance program in order to support a finding within six months after the termination date of the DPA that no material deficiencies exist with respect to the Bank's BSA/AML program. It is not expected that there will be any other actions required by the Bank with respect to this matter other than those contained in the DPA or that compliance with the DPA will have a material adverse effect on the Bank's operations. In return for the Bank's compliance with these undertakings, the DPA obligates the U.S. Attorney and the DOJ to, within 30 days after its expiration (extendable for up to 60 additional days at DOJ's discretion), request dismissal of the criminal charges filed against the Bank in connection with the execution of the DPA. Tax Benefit Preservation Plan On April 8, 2011, the Board of Directors of the Company, declared a dividend of one preferred share purchase right (a "Right") in respect of each share of common stock of the Company ("Common Share") outstanding at the close of business on April 25, 2011 (the "Record Date"), and to become outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (each as defined in the Plan). The Rights will be issued pursuant to a Tax Benefits Preservation Plan, dated as of April 15, 2011 (the "Plan"), between the Company and Registrar and Transfer Company, as Rights Agent (the "Rights Agent"). Each Right represents the right to purchase, upon the terms and subject to the conditions in the Plan, 1/10,000th of a share of Junior Participating Preferred Stock, Series B, par value $10.00 per share ("Preferred Share"), for $0.64 (the "Purchase Price"), subject to adjustment. The purpose of the Plan is to protect the Company's ability to use certain tax assets, such as net operating loss carry-forwards (the "Tax Benefits"), to offset future income. The Company's use of the Tax Benefits in the future would be significantly limited if it experiences an "ownership change" for U.S. federal income tax purposes. In general, an "ownership change" will occur if there is a cumulative increase in the Company's ownership by "5-percent shareholders" (as defined under U.S. income tax laws) that exceeds 50 percentage points over a rolling three-year period. The Plan is designed to reduce the likelihood that the Company will experience an ownership change by discouraging any person from becoming a beneficial owner of 4.99% or more of the then outstanding Common Shares (a "Threshold Holder"). There is no guarantee, however, that the Plan will prevent the Company from experiencing an ownership change. A corporation that experiences an ownership change will generally be subject to an annual limitation on certain of its pre-ownership change tax assets in an amount generally equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate (subject to certain adjustments). In connection with the adoption of the Plan above, the Board of Directors approved an amendment to Company's Articles of Incorporation for the purpose of creating the Junior Participating Preferred Stock, Series B, par value $10.00 per share, and to fix the designation, preferences, limitations and relative rights thereof (the "Articles of Amendment"). The Articles of Amendment were filed with the Secretary of the State of North Carolina and became effective on April 15, 2011.

21. Capital Raise, Merger Agreement and Related Matters

Merger Agreement with the Bank of Granite and Recapitalization Investment and Subscription Agreements

On April 26, 2011, the Company and Bank of Granite Corporation ("Granite"), parent company of Bank of Granite, entered into an agreement and plan of merger (the "Merger Agreement") pursuant to which a wholly owned subsidiary of the Company would, subject to the terms and conditions of the Merger Agreement, merge with and into Granite, with Granite surviving as a subsidiary of the Company (the "Merger"). Upon consummation of the Merger, each outstanding share of Granite's common stock, par value $1.00 per share ("Granite Common Stock"), other than shares held by the Company, Granite or any of their respective wholly owned subsidiaries and other than shares owned in a fiduciary capacity or as a result of debts previously contracted, will be converted into the right to receive 3.375 shares of FNB Common Stock.

Also on April 26, 2011 and in connection with the Merger Agreement, the Company entered into separate binding investment agreements (the "Investment Agreements") with Carlyle and Oak Hill Capital (together, the "Anchor Investors") to sell to the Anchor Investors FNB common stock, subject to the terms of the Investment Agreements. The proposed investments are part of an aggregate $310 million capital raise by the Company. Subject to the terms and conditions of the Investment Agreements, each of the Anchor Investors agreed to purchase 484,375,000 shares of FNB common stock at a price of $0.16 per share, or approximately $77.5 million for each of Carlyle and Oak Hill Capital.

On June 16, 2011, the Company entered into binding subscription agreements with accredited investors pursuant to which those investors agreed to purchase common stock of the Company, at a purchase price of $0.16 per share, for an aggregate of approximately $75 million as part of the $310 million capital raise.

On August 4, 2011, the Company entered into binding subscription agreements with additional accredited investors and amendments to the Investment Agreements and certain of the subscription agreements executed on June 16, 2011 to secure and finalize allocations of the entire proposed $310 million capital raise. As a result of these amendments and new subscription agreements, each Anchor Investor will be investing approximately $79 million and the other investors will invest the remaining approximately $152 million. If the investments are completed, each Anchor Investor will own approximately 23% of the voting equity of the Company after giving effect to the Merger, the investments by the Anchor Investors and the other investors, and the other transactions contemplated to be implemented in connection with such transactions. Each of the other investors will own less than 4.99% of the voting equity of the Company.

Issuance of the shares upon the closing of the Investment Agreements and subscription agreements (the "Closing") is subject to a number of conditions, which are set forth in the Investment Agreements and subscription agreements.

SunTrust Settlement

On August 1, 2011, the Bank and SunTrust Bank entered into an agreement (the "SunTrust Settlement") to settle the $2.5 million in subordinated debt of the Bank held by SunTrust Bank for cash in amount equal to 35% of the principal amount of the debt, plus 100% of the accrued but unpaid interest on the debt as of the closing date of the Merger. The agreement also provides for the Bank's repurchase of the 12.5 million shares of Bank preferred stock owned by SunTrust Bank for cash in an amount equal to 25% of the aggregate liquidation amount of the preferred stock, plus 100% of the accrued but unpaid dividends thereon as of the closing date of the Merger.

TARP Exchange

The United States Department of the Treasury (the "Treasury") issued a letter, dated April 6, 2011, indicating its agreement to exchange the Company's preferred stock held by the Treasury for the Company's Common Stock having a value equal to the sum of 25% of the aggregate liquidation preference of the preferred stock (i.e., $51.5 million) plus 100% of the amount of accrued and unpaid dividends on the preferred stock as of the closing date (the "TARP Exchange"). In the letter of intent, the Treasury also indicated its intent to adjust its warrant to reduce the warrant exercise price.

Deferred Prosecution Agreement

The Anchor Investors required that the Investment Agreements include, as a condition to closing, that the Bank resolve a potential claim with the U.S. Attorney for the Western District of North Carolina (the "U.S. Attorney") and the U.S. Department of Justice (the "DOJ") arising from a Grand Jury Subpoena received by the Bank from the U.S. Attorney dated August 11, 2010. The subpoena related to one of the Bank's customers who, at the time of the subpoena, was under indictment for, and was subsequently convicted of, securities fraud, wire fraud and money laundering relating to a suspected Ponzi scheme. The Bank responded in full to the subpoena, which had requested comprehensive documentation related to the Bank's compliance with the Bank Secrecy Act and Anti-Money Laundering ("BSA/AML") laws from January 1, 2005 onward.

To facilitate the signing of the Investment Agreements, following discussions with representatives of the U.S. Attorney and the DOJ, the Bank, the U.S. Attorney and the DOJ agreed to enter into a deferred prosecution agreement ("DPA") to settle any potential claims. The DPA was signed on April 26, 2011 and its effectiveness is conditioned on approval of the DPA by the U.S. District Court for the Western District of North Carolina (the "District Court"). Under the terms of the DPA, the DPA will be in effect for 24 months from its effective date and will require the Bank to (1) implement the Office of the Comptroller of the Currency's recommendations relating to the Bank's BSA/AML compliance program, (2) pay on the Closing Date $400,000 to the District Court for distribution to the victims of the fraud perpetrated by the customer, (3) submit to the U.S. Attorney and the DOJ periodic certifications of the Bank's BSA/AML compliance, and (4) strengthen the Bank's BSA/AML compliance program in order to support a finding within six months after the termination date of the DPA that no material deficiencies exist with respect to the Bank's BSA/AML program. It is not expected that there will be any other actions required by the Bank with respect to this matter other than those contained in the DPA or that compliance with the DPA will have a material adverse effect on the Bank's operations. In return for the Bank's compliance with these undertakings, the DPA obligates the U.S. Attorney and the DOJ to, within 30 days after its expiration (extendable for up to 60 additional days at DOJ's discretion), request dismissal of the criminal charges filed against the Bank in connection with the execution of the DPA.

Tax Benefit Preservation Plan

On April 8, 2011, the Board of Directors of the Company, declared a dividend of one preferred share purchase right (a "Right") in respect of each share of common stock of the Company ("Common Share") outstanding at the close of business on April 25, 2011 (the "Record Date"), and to become outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (each as defined in the Plan). The Rights will be issued pursuant to a Tax Benefits Preservation Plan, dated as of April 15, 2011 (the "Plan"), between the Company and Registrar and Transfer Company, as Rights Agent (the "Rights Agent"). Each Right represents the right to purchase, upon the terms and subject to the conditions in the Plan, 1/10,000th of a share of Junior Participating Preferred Stock, Series B, par value $10.00 per share ("Preferred Share"), for $0.64 (the "Purchase Price"), subject to adjustment.

The purpose of the Plan is to protect the Company's ability to use certain tax assets, such as net operating loss carry-forwards (the "Tax Benefits"), to offset future income. The Company's use of the Tax Benefits in the future would be significantly limited if it experiences an "ownership change" for U.S. federal income tax purposes. In general, an "ownership change" will occur if there is a cumulative increase in the Company's ownership by "5-percent shareholders" (as defined under U.S. income tax laws) that exceeds 50 percentage points over a rolling three-year period.

The Plan is designed to reduce the likelihood that the Company will experience an ownership change by discouraging any person from becoming a beneficial owner of 4.99% or more of the then outstanding Common Shares (a "Threshold Holder"). There is no guarantee, however, that the Plan will prevent the Company from experiencing an ownership change.

A corporation that experiences an ownership change will generally be subject to an annual limitation on certain of its pre-ownership change tax assets in an amount generally equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate (subject to certain adjustments).

In connection with the adoption of the Plan above, the Board of Directors approved an amendment to Company's Articles of Incorporation for the purpose of creating the Junior Participating Preferred Stock, Series B, par value $10.00 per share, and to fix the designation, preferences, limitations and relative rights thereof (the "Articles of Amendment"). The Articles of Amendment were filed with the Secretary of the State of North Carolina and became effective on April 15, 2011.