10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012 Commission File Number 0-13823

FNB UNITED CORP.

(Exact name of Registrant as specified in its Charter)

North Carolina	56-1456589
(State of Incorporation)	(I.R.S. Employer Identification No.)
150 South Fayetteville Street
Asheboro, North Carolina	27203
(Address of principal executive offices)	(Zip Code)

(336) 626-8300

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

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

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

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

As of November 1, 2012 (the most recent practicable date), the Registrant had outstanding approximately 21,588,056 shares of Common Stock.

FNB United Corp. and Subsidiaries

Report on Form 10-Q

September 30, 2012

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	1
	Consolidated Statements of Operations for Three and Nine Months Ended September 30, 2012 and 2011	2
	Consolidated Statements of Comprehensive Loss for Three and Nine Months Ended September 30, 2012 and 2011	3
	Consolidated Statements of Shareholders' Equity for Nine Months Ended September 30, 2012 and 2011	4
	Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2012 and 2011	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4	Controls and Procedures	53
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	54
Item 1A	Risk Factors	54
Item 2	Unregistered Sales of Equity Securities and Repurchases	54
Item 3	Defaults Upon Senior Securities	54
Item 4	Mine Safety Disclosures	54
Item 5	Other Information	54
Item 6	Exhibits	54
	Signatures	55

i

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

FNB United Corp. and Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share data)	September 30, 2012			December 31, 2011
Assets
Cash and due from banks	$	45,556		$	35,773
Interest-bearing bank balances	282,314			517,643
Investment securities:
Available-for-sale, at estimated fair value (amortized cost of $482,979 in 2012 and $430,836 in 2011)	492,386			431,306
Loans held for sale	8,212			4,529
Loans held for investment	1,231,795			1,217,535
Less: Allowance for loan losses	(30,859		)	(39,360		)
Net loans held for investment	1,200,936			1,178,175
Premises and equipment, net	52,637			53,763
Other real estate owned and property acquired in settlement of loans	80,800			110,386
Core deposit premiums and other intangibles	7,369			8,177
Goodwill	4,205			3,905
Bank-owned life insurance	38,482			37,515
Other assets	25,168			27,691
Assets from discontinued operations	—			245
Total Assets	$	2,238,065		$	2,409,108
Liabilities
Deposits:
Noninterest-bearing demand deposits	$	264,370		$	234,673
Interest-bearing deposits:
Demand, savings and money market deposits	881,922			849,828
Time deposits of $100,000 or more	322,964			394,431
Other time deposits	512,997			650,179
Total deposits	1,982,253			2,129,111
Retail repurchase agreements	9,433			8,838
Federal Home Loan Bank advances	58,339			58,370
Junior subordinated debentures	56,702			56,702
Other liabilities	24,465			25,980
Liabilities from discontinued operations	—			1,092
Total Liabilities	2,131,192			2,280,093
Shareholders' Equity
Preferred stock Series A, $10.00 par value; authorized 200,000 shares, no shares issued and outstanding in 2012 and 2011	—			—
Preferred stock, $1.00 par value, authorized 15,000,000 shares, no shares issued and outstanding in 2012 and 2011	—			—
Common stock, no par value; authorized 2,500,000,000 shares, issued 21,588,056 shares in 2012 and 21,102,668 shares in 2011	460,953			455,166
Accumulated deficit	(355,891		)	(322,182		)
Accumulated other comprehensive income (loss)	1,811			(3,969		)
Total Shareholders' Equity	106,873			129,015
Total Liabilities and Shareholders' Equity	$	2,238,065		$	2,409,108

See accompanying notes to consolidated financial statements.

1

FNB United Corp. and Subsidiaries

Consolidated Statements of Operations (unaudited)

(in thousands, except share and per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Interest Income
Interest and fees on loans	$	16,264		$	10,967		$	50,458		$	36,250
Interest and dividends on investment securities:
Taxable income	2,667			2,166			8,238			6,963
Non-taxable income	—			49			—			346
Other interest income	276			173			936			456
Total interest income	19,207			13,355			59,632			44,015
Interest Expense
Deposits	3,320			4,683			11,244			14,814
Retail repurchase agreements	6			11			23			43
Federal Home Loan Bank advances	391			609			1,057			2,010
Other borrowed funds	288			313			877			1,009
Total interest expense	4,005			5,616			13,201			17,876
Net Interest Income before Provision for Loan Losses	15,202			7,739			46,431			26,139
Provision for loan losses	32			7,181			10,877			60,944
Net Interest Income/(Loss) after Provision for Loan Losses	15,170			558			35,554			(34,805		)
Noninterest Income
Service charges on deposit accounts	1,883			1,377			5,803			4,306
Mortgage loan income/(loss)	728			(116		)	1,051			(10		)
Cardholder and merchant services income	1,014			808			3,057			2,416
Trust and investment services	234			221			692			973
Bank owned life insurance	290			262			910			928
Other service charges, commissions and fees	252			198			777			554
Securities (loss)/gains, net	(33		)	7,393			1,923			7,308
Loss on fair value swap	—			(182		)	—			(13		)
Other income	275			119			788			484
Total noninterest income	4,643			10,080			15,001			16,946
Noninterest Expense
Personnel expense	9,717			6,453			30,245			19,178
Net occupancy expense	1,710			1,180			4,866			3,483
Furniture, equipment and data processing expense	2,012			1,561			6,008			4,780
Professional fees	1,336			1,339			3,709			4,218
Stationery, printing and supplies	152			100			446			317
Advertising and marketing	166			170			420			506
Other real estate owned expense	3,602			4,685			21,594			31,458
Credit/debit card expense	432			434			1,279			1,253
FDIC insurance	1,056			1,461			2,879			4,899
Loan collection expense	1,119			1,220			2,379			3,871
Merger-related expense	939			2,207			2,357			2,207
Core deposit intangible amortization	352			199			1,056			596
Other expense	2,009			2,191			7,127			5,512
Total noninterest expense	24,602			23,200			84,365			82,278
Loss from continuing operations, before income taxes	(4,789		)	(12,562		)	(33,810		)	(100,137		)
Income tax expense (benefit) - continuing operations	(77		)	1,328			(128		)	752
Loss from continuing operations, net of tax	(4,712		)	(13,890		)	(33,682		)	(100,889		)
Loss from discontinued operations, net of tax	—			(40		)	(27		)	(5,722		)
Net loss	(4,712		)	(13,930		)	(33,709		)	(106,611		)
Dividends on preferred stock	—			(1,093		)	—			(3,197		)
Net loss to common shareholders	(4,712		)	(15,023		)	$	(33,709	)	$	(109,808	)
Weighted average number of common shares outstanding - basic and diluted	21,588,027			114,320			21,294,727			114,277
Net loss per common share from continuing operations - basic and diluted	$	(0.22	)	$	(131.06	)	$	(1.58	)	$	(910.82	)
Net loss per common share from discontinued operations - basic and diluted	—			(0.35		)	—			(50.07		)
Net loss per common share - basic and diluted	(0.22		)	(131.41		)	(1.58		)	(960.89		)

See accompanying notes to consolidated financial statements.

2

FNB United Corp. and Subsidiaries

Consolidated Statements of Comprehensive Loss (unaudited)

(dollars in thousands)	Three Months Ended September 30,
	2012			2011
Net loss	$	(4,712	)	$	(13,930	)
Other comprehensive income:
Unrealized gains arising from termination of supplemental executive retirement plans	371			—
Unrealized holdings gains arising during the period on available-for-sale securities	5,633			3,612
Tax effect	(2,225		)	(1,427		)
Unrealized holdings gains arising during the period on available-for-sale securities, net of tax	3,408			2,185
Reclassification adjustment for loss on available-for-sale securities included in net income	33			(7,393		)
Tax effect	(13		)	2,920
Reclassification adjustment for loss on available-for-sale securities included in net income, net of tax	20			(4,473		)
Other comprehensive income, net of tax:	3,799			(2,288		)
Comprehensive loss	$	(913	)	$	(16,218	)

(dollars in thousands)	Nine Months Ended September 30,
	2012			2011
Net loss	$	(33,709	)	$	(106,611	)
Other comprehensive income:
Unrealized gains arising from termination of supplemental executive retirement plans	371			—
Unrealized holdings gains arising during the period on available-for-sale securities	10,817			8,132
Tax effect	(4,245		)	(3,212		)
Unrealized holdings gains arising during the period on available-for-sale securities, net of tax	6,572			4,920
Reclassification adjustment for (gain) loss on available-for-sale securities included in net income	(1,923		)	(7,308		)
Tax effect	760			2,888
Reclassification adjustment for (gain) loss on available-for-sale securities included in net income, net of tax	(1,163		)	(4,420		)
Other comprehensive income, net of tax:	5,780			500
Comprehensive loss	$	(27,929	)	$	(106,111	)

See accompanying notes to consolidated financial statements.

3

FNB United Corp. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (unaudited)

For Nine Months Ended September 30, 2012 and 2011

											Retained			Accumulated
(dollars in thousands, except share and per share data)									Common		Earnings/			Other
	Preferred Stock			Common Stock					Stock		(Accumulated			Comprehensive
	Shares	Amount		Shares		Amount			Warrant		Deficit)			Loss			Total
Balance, December 31, 2010	7,551,500	$	56,424	114,246		$	143,634		$	3,891	$	(229,095	)	$	(3,691	)	$	(28,837	)
Comprehensive loss:
Net loss	—	—		—		—			—		(106,611		)	—			(106,611		)
Other comprehensive income, net of tax	—	—		—		—			—		—			500			500
Total comprehensive loss																	(106,111		)
Issuance of preferred stock, series A	5,000,000	5,000		—		—			—		—			—			5,000
Accretion of discount on preferred stock	—	571		—		—			—		(571		)	—			—
Stock options:
Compensation expense recognized	—	—		—		16			—		—			—			16
Balance, September 30, 2011	12,551,500	$	61,995	114,246		$	143,650		$	3,891	$	(336,277	)	$	(3,191	)	$	(129,932	)
Balance, December 31, 2011	—	$	—	21,102,668		$	455,166		$	—	$	(322,182	)	$	(3,969	)	$	129,015
Comprehensive loss:
Net loss	—	—		—		—			—		(33,709		)	—			(33,709		)
Other comprehensive income, net of tax	—	—		—		—			—		—			5,780			5,780
Total comprehensive loss																	(27,929		)
Stock options:
Compensation expense recognized	—	—		—		1			—		—			—			1
Expense related to 2011 issuance of common stock	—	—		—		(913		)	—		—			—			(913		)
Return of common stock not received for fractional shares rounding purposes in the 1:100 reverse stock split	—	—		(586	)	—			—		—			—			—
Exercise of warrants related to stock offering	—	—		186		3			—		—			—			3
Stock offering, net of issuance costs of $158	—	—		485,788		6,696			—		—			—			6,696
Balance, September 30, 2012	—	$	—	21,588,056		$	460,953		$	—	$	(355,891	)	$	1,811		$	106,873

See accompanying notes to consolidated financial statements.    

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FNB United Corp. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)	Nine Months Ended September 30,
	2012			2011
Operating Activities
Net loss	$	(33,709	)	$	(106,611	)
Net loss from discontinued operations	(27		)	(5,722		)
Net loss from continuing operations	(33,682		)	(100,889		)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization of premises and equipment	2,906			2,382
Provision for loan losses	10,877			60,944
Deferred income taxes	(128		)	333
Deferred loan fees and costs, net	(3,432		)	1,755
Premium amortization and discount accretion of investment securities, net	6,547			2,746
Net gain on sale of investment securities	(1,923		)	(7,308		)
Amortization of core deposit premiums	1,056			596
Net accretion of purchase accounting adjustments	(19,661		)	—
Adjustment to goodwill	(300		)	—
Stock compensation expense	1			16
Increase in cash surrender value of bank-owned life insurance, net	(967		)	(817		)
Loans held for sale:
Origination of loans held for sale	(40,078		)	—
Net proceeds from sale of loans held for sale	32,425			(10		)
Net loss/(gain) on sale of loans held for sale	(559		)	10
Mortgage servicing rights amortization and impairment	—			145
Net loss on sales and write-downs of other real estate owned	16,091			27,683
Changes in assets and liabilities:
Decrease in accrued interest receivable and other assets	431			13,836
Increase (decrease) in accrued interest payable and other liabilities	(2,742		)	6,341
Net cash (used in)/provided by operating activities of continuing operations	(33,138		)	7,763
Net effect of discontinued operations	(874		)	31,768
Net cash (used in)/provided by operating activities	(34,012		)	39,531
Investing Activities
Available-for-sale securities:
Proceeds from sales	133,241			290,185
Proceeds from maturities, calls and principal repayments	120,718			50,047
Purchases	(309,221		)	(228,785		)
Net (increase)/decrease in loans held for investment	(32,856		)	173,938
Proceeds from sales of other real estate owned	37,528			39,521
Purchases of premises and equipment	(1,862		)	(2,522		)
Proceeds from sales of premises and equipment	36			—
Net cash (used in) provided by investing activities of continuing operations	(52,416		)	322,384
Net effect of discontinued operations	—			22
Net cash (used in) provided by investing activities	(52,416		)	322,406
Financing Activities
Net decrease in deposits	(145,465		)	(130,754		)
Increase (decrease) in retail repurchase agreements	595			(2,737		)
Decrease in Federal Home Loan Bank advances	(31		)	(25,029		)
Expenses paid in 2012 related to 2011 capital raise	(913		)	—
Issuance of common stock, net of expense	6,696			—
Net cash used in financing activities of continuing operations	(139,118		)	(158,520		)
Net effect of discontinued operations	—			—
Net cash used in financing activities	(139,118		)	(158,520		)
Net (Decrease) Increase in Cash and Cash Equivalents	(225,546		)	203,417
Cash and Cash Equivalents at Beginning of Period	553,416			160,594
Cash and Cash Equivalents at End of Period	$	327,870		$	364,011
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest	$	13,982		$	17,516
Noncash transactions:
Foreclosed loans transferred to other real estate owned	23,647			101,245
Loans to facilitate the sale of other real estate owned	778			—
Transfer of loans from held for investment to held for sale	600			—
Transfer of loans from held for sale to held for investment	1,119			—
Unrealized securities gains/(losses), net of income taxes	5,409			500
Conversion of subordinated debt to preferred stock	—			(5,000		)
Issuance of preferred stock in subordinated debt conversion	—			5,000

See accompanying notes to consolidated financial statements.

5

FNB United Corp. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

Nature of Operations

FNB United Corp., we or us (which also refers to FNB and our subsidiaries on a consolidated basis) ("FNB"), is a bank holding company incorporated in 1984 under the laws of the State of North Carolina. We own two bank subsidiaries: CommunityOne Bank, N.A. (“CommunityOne”), a national banking association headquartered in Asheboro, North Carolina and, through Bank of Granite Corporation (“Granite Corp.”), Bank of Granite (“Granite”), a state chartered bank headquartered in Granite Falls, North Carolina.

Through our bank subsidiaries, we offer a complete line of consumer, wealth management, mortgage and business banking services, including loan, deposit, cash management, investment management and trust services, to individual and business customers through operations located throughout central, southern and western North Carolina, including the counties of Alamance, Alexander, Ashe, Burke, Caldwell, Catawba, Chatham, Gaston, Guilford, Iredell, Mecklenburg, Montgomery, Moore, Orange, Randolph, Richmond, Rowan, Scotland, Watauga and Wilkes. Management believes that the banks have a relatively stable deposit base and no material amount of deposits is obtained from a single depositor or group of depositors, including federal, state and local governments.

CommunityOne owns two subsidiaries: Dover Mortgage Company (“Dover”) and First National Investor Services, Inc. Dover previously engaged in the business of originating, underwriting and closing mortgage loans for sale in the secondary market. Dover ceased operations in the first quarter of 2011 and filed for Chapter 11 bankruptcy on February 15, 2012. First National Investor Services, Inc. holds deeds of trust for CommunityOne. Through Granite Corp., we also own Granite Mortgage, Inc., which ceased mortgage operations in 2009 and filed for Chapter 11 bankruptcy on February 15, 2012. FNB also owns FNB United Statutory Trust I, FNB United Statutory Trust II, and Catawba Valley Capital Trust II, which were formed to facilitate the issuance of trust preferred securities.

On October 21, 2011, as part of the recapitalization of FNB, FNB acquired Granite Corp., through the merger of a wholly owned subsidiary of FNB merging into Granite Corp. (the "Merger"). The Merger was part of FNB's recapitalization strategy.

General

The accompanying consolidated financial statements, prepared without audit, include the accounts of FNB and its subsidiaries. All significant intercompany balances and transactions have been eliminated. Descriptions of the organization and business of FNB, accounting policies followed by FNB and other relevant information are contained in FNB's Annual Report on Form 10-K for the year ended December 31, 2011, as amended by its Amendment No. 1 (the "Form 10-K"), including the notes to the consolidated financial statements filed as part of that report. This quarterly report should be read in conjunction with the Form 10-K.

In the opinion of management, the accompanying condensed consolidated financial statements contain all the adjustments, all of which are normal recurring adjustments, necessary to present fairly the financial position of FNB as of September 30, 2012 and December 31, 2011, and the results of its operations and cash flows for the three and nine months ended September 30, 2012 and 2011, respectively.

All financial information is reported on a continuing operations basis, unless otherwise noted. See Note 2 to the consolidated financial statements for a discussion regarding discontinued operations and certain assets and liabilities at September 30, 2012 and December 31, 2011.

Use of Estimates

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States ("GAAP"). Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowances for loan losses (“ALL”), the carrying value of other real estate owned (“OREO”), the carrying value of intangible assets, the fair value of net assets acquired in the Merger and the realization of deferred tax assets.

Reclassification

Certain reclassifications have been made to the prior period consolidated financial statements to place them on a comparable basis with the current period consolidated financial statements. These reclassifications have no effect on net income or shareholders' equity as previously reported.

During the first quarter of 2012, FNB implemented a purchased loan accounting system and finalized its methodology to allocate the fair value of purchased impaired loans in pools to individual loans for purposes of several of the loan disclosure tables in Note 5 to the

6

consolidated financial statements. In order to present these tables for prior periods on a comparable basis to current period tables in these consolidated financial statements, we have reclassified certain amounts as of December 31, 2011 in the tables between loan portfolio segments and classes, between purchased contractual and purchased impaired loans, and between risk grade categories. These reclassifications have no effect on net income, the loan fair value mark, total loans or shareholders' equity as of or for the period ended December 31, 2011.

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date of this filing and has concluded that no subsequent events have occurred requiring accrual or disclosure in addition to that included herein.

Recent Accounting Pronouncements

Disclosures about Fair Value -Accounting Standards Update ("ASU") 2011-04 was issued in May 2011 to amend the Fair Value Measurement topic of the Accounting Standards Codification ("ASC") by clarifying the application of existing fair value measurement and disclosure requirements and by changing particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The amendment was effective for FNB on January 1, 2012, and the related disclosures are presented in Note 9.

Comprehensive Income - The Comprehensive Income topic of the ASC was amended in June 2011. The amendment eliminates the option to present other comprehensive income as a part of the statement of changes in shareholders' equity and requires consecutive presentation of the statement of net income and other comprehensive income. The amendments were to become applicable to FNB on January 1, 2012 and were to be applied retrospectively. In December 2011, the topic was further amended to defer the effective date of presenting reclassification adjustments from other comprehensive income to net income on the face of the financial statements. Companies should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect prior to the amendments while FASB redeliberates future requirements. The remaining provisions of this update took effect for FNB on January 1, 2012.

Goodwill - The Intangibles - Goodwill and Other topic of the ASC was amended in September 2011. The amendments in this Update allow an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessment, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, they will have to perform the first step of the two-step impairment test. Under the amendments in this Update, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. The amendment was effective for FNB on January 1, 2012, and has not had a material impact on the financial statements of FNB.

2. Discontinued Operations

All operations of Dover, a subsidiary of CommunityOne, were discontinued as of March 17, 2011. Dover, acquired by FNB in 2003, originated, underwrote and closed mortgage loans for sale into the secondary market. It maintained a retail origination network based in Charlotte, North Carolina, which originated loans for properties located in North Carolina. Dover also engaged in the wholesale mortgage origination business and conducted retail mortgage origination business outside of North Carolina. Operations outside of the State of North Carolina and the wholesale mortgage origination business were discontinued in February 2011, and all remaining operations were discontinued on March 17, 2011. Dover filed for Chapter 11 bankruptcy on February 15, 2012 in the United States Bankruptcy Court for the Western District of North Carolina. All of the assets and liabilities of Dover were written off at that time.

The results of operations of a component of an entity that has been disposed of shall be reported in discontinued operations if both the operations and cash flows of the component have been, or will be, eliminated from ongoing operations of the entity as a result of the disposal transaction and the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction. As a result, the Consolidated Balance Sheets, Statements of Operations and Statement of Cash Flows for all periods reflect retrospective application of Dover's classification as a discontinued operation.

Assets and liabilities of discontinued operations at the dates indicated were as follows:

7

(dollars in thousands)	September 30, 2012		December 31, 2011
Assets
Loans held for sale	$	—	$	233
Premises and equipment, net	—		5
Other real estate owned	—		—
Other assets	—		7
Assets of discontinued operations	$	—	$	245
Liabilities
Other liabilities	$	—	$	1,092
Liabilities of discontinued operations	$	—	$	1,092

Net loss from discontinued operations, net of tax, at the dates indicated were as follows:

(dollars in thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Interest Income
Interest and fees on loans	$	—	$	12		$	—		$	67
Total interest income	—		12			—			67
Interest Expense
Other borrowed funds	—		—			—			—
Total interest expense	—		—			—			—
Net Interest Income before Provision for Loan Losses	—		12			—			67
Provision for loan losses	—		—			—			—
Net Interest Income after Provision for Loan Losses	—		12			—			67
Noninterest Income
Mortgage loan loss	—		(2		)	—			(167		)
Other service charges, commissions and fees, net	—		—			—			(11		)
Other income	—		—			—			10
Total noninterest loss	—		(2		)	—			(168		)
Noninterest Expense
Personnel expense	—		(1		)	1			1,442
Net occupancy expense	—		5			1			216
Furniture, equipment and data processing expense	—		14			—			185
Professional fees	—		31			25			209
Stationery, printing and supplies	—		—			—			8
Advertising and marketing	—		(1		)	—			27
Other real estate owned expense	—		—			—			166
Provision for recourse loans	—		(8		)	—			3,317
Other expense	—		10			—			264
Total noninterest expense	—		50			27			5,834
Loss before income taxes	—		(40		)	(27		)	(5,935		)
Income tax (benefit)/expense	—		—			—			(213		)
Net loss from discontinued operations, net of tax	$	—	$	(40	)	$	(27	)	$	(5,722	)

All financial information in the consolidated financial statements and notes to the consolidated financial statements reflects continuing operations, unless otherwise noted.

8

3. Goodwill and Other Intangible Assets

We have accounted for the Merger as a business combination under the acquisition method of accounting. As a result, we have recognized in our financial statements the identifiable net assets acquired and an amount of goodwill (representing the difference between the purchase price and the identifiable net assets). During the measurement period following a business combination, the amount of identifiable net assets recognized is subject to further adjustment to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. GAAP requires that the measurement period cannot exceed one year from the acquisition date.

Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization and are instead tested for impairment no less than annually. Impairment exists when the carrying value of goodwill exceeds its implied fair value. An impairment loss would be recognized in an amount equal to that excess and would be included in noninterest expense in the Consolidated Statements of Operations. None of the goodwill recognized in the Merger is expected to be deductible for income tax purposes.

During the first quarter of 2012, we recognized $0.3 million in additional goodwill from the Merger. This additional amount was due to new valuations received on OREO acquired in the Merger, which were written down to our best estimate of fair value.

Our intangible assets with definite lives are core deposit premiums ("CDP") and mortgage servicing rights ("MSR"). CDPs are amortized over their useful lives to their estimated residual value and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits. MSRs are amortized over the expected lives of the underlying mortgages including prepayment estimates.

4. Investment Securities

The primary objective of FNB's management of the investment portfolio is to maintain a portfolio of high quality, highly liquid investments yielding competitive returns. FNB is required under federal regulations to maintain adequate liquidity to ensure safe and sound operations. FNB maintains investment balances based on a continuing assessment of cash flows, the level of loan production, current interest rate risk strategies and an assessment of the potential future direction of market interest rate changes. Investment securities differ in terms of default, interest rate, liquidity and expected rate of return risks.

The following table summarizes the amortized cost and estimated fair value of available-for-sale investment securities and presents the related gross unrealized gains and losses:

9

September 30, 2012
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Obligations of:
U.S. Treasury and government agencies	$	6,648	$	274	$	—	$	6,922
U.S. government sponsored enterprises	22,128		57		—		22,185
States and political subdivisions	5,952		110		—		6,062
Residential mortgage-backed securities-GSE	359,241		8,666		140		367,767
Residential mortgage-backed securities-Private	23,601		594		473		23,722
Commercial mortgage backed securities-GSE	23,245		3		—		23,248
Commercial mortgage-backed securities-Private	5,312		48		—		5,360
Corporate notes	36,852		308		40		37,120
Total	$	482,979	$	10,060	$	653	$	492,386
December 31, 2011
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Obligations of:
U.S. Treasury and government agencies	$	7,081	$	107	$	—	$	7,188
U.S. government sponsored enterprises	32,479		36		151		32,364
States and political subdivisions	6,075		16		1		6,090
Residential mortgage-backed securities-GSE	348,884		2,611		1,222		350,273
Residential mortgage-backed securities-Private	33,111		73		967		32,217
Corporate notes	3,206		—		32		3,174
Total	$	430,836	$	2,843	$	2,373	$	431,306

CommunityOne and Granite, as members of the Federal Home Loan Bank of Atlanta (“FHLB”), are required to own capital stock in the FHLB based generally upon the balances of total assets and FHLB advances. FHLB capital stock is pledged to secure FHLB advances. This investment is carried at cost since no ready market exists for FHLB stock and there is no quoted market value. However, redemption of this stock has historically been at par value. The combined banks owned a total of $6.3 million of FHLB stock at September 30, 2012 and at December 31, 2011. Due to the redemption provisions of FHLB stock, FNB estimated that fair value approximated cost and that this investment was not impaired at September 30, 2012. FHLB stock is included in other assets at its original cost basis.

CommunityOne, as a member bank of the Federal Reserve Bank of Richmond (“FRBR”), is required to own capital stock of the FRBR based upon a percentage of the bank's common stock and surplus. This investment is carried at cost since no ready market exists for FRBR stock and there is no quoted market value. At both September 30, 2012 and December 31, 2011, CommunityOne owned a total of $3.7 million, of FRBR stock. Due to the nature of this investment in an entity of the U.S. government, FNB estimated that fair value approximated the cost and that this investment was not impaired at September 30, 2012. FRBR stock is included in other assets at its original cost basis.

At September 30, 2012, $93.4 million of the investment securities portfolio was pledged to secure public deposits, $14.5 million was pledged to retail repurchase agreements, $4.0 million was pledged to the FRBR and $2.1 million was pledged to others, leaving $378.4 million available as lendable collateral.

During the three and nine months ended September 30, 2012, the banks sold securities with a book value of $21.4 million and $134.1 million respectively, and recognized a loss of $(33) thousand and a gain of $1.9 million, respectively. The banks sold these securities in order to modify our interest rate sensitivity profile and to eliminate below-investment grade securities. During the three and nine months ended September 30, 2011, the banks sold securities with a book value of $252.7 million and $282.9 million respectively, and recognized a gain of $7.4 million and $7.3 million, respectively.

The following tables show our investments' estimated fair value and gross unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011. All unrealized losses on investment securities are considered by management to be temporary given the credit ratings on these investment securities or the short duration of the unrealized loss or both.

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	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
September 30, 2012
Residential mortgage-backed securities-GSE	$	5,599	$	24	$	19,275	$	117	$	24,874	$	141
Residential mortgage-backed securities-Private	7,858		472		—		—		7,858		472
Corporate notes	3,219		40		—		—		3,219		40
Total	$	16,676	$	536	$	19,275	$	117	$	35,951	$	653
	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
December 31, 2011
Obligations of:
U.S. government sponsored enterprises	$	21,248	$	151	$	—	$	—	$	21,248	$	151
States and political subdivisions	1,907		1		—		—		1,907		1
Residential mortgage-backed securities-GSE	89,730		1,042		16,552		180		106,282		1,222
Residential mortgage-backed securities-Private	21,519		967		—		—		21,519		967
Corporate notes	3,173		32		—		—		3,173		32
Total	$	137,577	$	2,193	$	16,552	$	180	$	154,129	$	2,373

At September 30, 2012, 7 available-for-sale securities were in an unrealized loss position less than 12 months compared to 32 at December 31, 2011. At September 30, 2012, there were 4 available-for-sale securities that were in an unrealized loss position for longer than 12 months, compared to seven at December 31, 2011.

If an entity intends to sell a debt security or cannot assert it is more likely than not that it will not have to sell the security before recovery, other than temporary impairment ("OTTI") must be taken. If the entity does not intend to sell the debt security before recovery, but the entity does not expect to recover the entire amortized cost basis, then OTTI must be taken, but the amount of impairment is to be bifurcated between impairment due to credit (which is recorded through earnings) and noncredit impairment (which becomes a component of other comprehensive income (“OCI”) for both available-for-sale and held-to-maturity securities). For held-to-maturity securities, the amount in OCI will be amortized prospectively over the security's remaining life. FNB did not have any OTTI during the three and nine months ended September 30, 2012 and September 30, 2011.

FNB analyzed its securities portfolio at September 30, 2012, paying particular attention to its private label mortgage-backed securities. After considering ratings, fair value, cash flows and other factors, FNB does not believe securities to be other-than-temporary impaired.

The aggregate amortized cost and fair value of securities at September 30, 2012, by remaining contractual maturity, are shown in the following table. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

	Available-for-Sale
(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	8,372	$	8,412
Due after one one year through five years	53,301		53,736
Due after five years through 10 years	3,259		3,219
Due after 10 years	6,648		6,922
Total	71,580		72,289
Mortgage-backed securities	411,399		420,097
Total	$	482,979	$	492,386

11

5. Loans and Allowance for Loan Losses

General

Loans held for investment are stated at the principal amounts outstanding adjusted for purchase premiums/discounts, deferred net loan fees and costs, and unearned income.  FNB reports its loan portfolio by segment and classes, which are disaggregations of portfolio segments.  FNB's portfolio segments are:  Commercial and agricultural, Real estate, and Consumer loans.  The Commercial and agricultural loan and Consumer loan portfolios are not further segregated into classes.  The classes within the Real estate portfolio segment include Real estate - construction and Real estate mortgage, broken into 1-4 family residential mortgage and Commercial real estate mortgage loans.

Loan fees and the incremental direct costs associated with originating loans are deferred and subsequently recognized over the life of the loan as an adjustment to interest income.

In addition to originating loans we also purchase loans. At acquisition purchased loans are designated as either purchased contractual loans ("PC loans") or purchased impaired loans ("PI loans"). PC loans are acquired loans where management believes it is probable that it will receive all principal as of the date of acquisition.  These loans are accounted for under the contractual cash flow method, under ASC 310-20. Any discount or premium paid on PC loans is recorded in interest income using the effective yield method over the expected life of the loans.

PI loans are acquired loans where management believes, at acquisition date, it is probable that all principal on the acquired loans will not be received.  PI loans are placed in homogeneous risk based pools where accounting for projected cash flows is performed, as allowed under ASC 310-30.  Once a pool is established the individual loans within each pool do not change.  As management obtains new information related to changes in expected principal loss and expected cash flows, by pool, we record either an increase in yield when new expected cash flows increase, an allowance for loan losses when new expected cash flows decline, or a decrease in yield when there is only a timing difference in expected cash flows.  

Loans acquired in the Merger ("Granite Purchased Loans") included PI loans and PC loans. Loans designated as PC loans included performing revolving consumer and performing revolving commercial loans on acquisition date.

During the nine months ended September 30, 2012, CommunityOne purchased $137.4 million of performing residential mortgage loans, including premiums of $3.7 million. During the three and nine months ended September 30, 2012, Granite purchased $35.8 million of performing residential mortgage loans, including a premium of $0.3 million, These loan purchases are accounted for as PC loans.

ALL Methodology

FNB's Allowance for Loan Losses ("ALL"), which is utilized to absorb actual losses in the loan portfolio, is maintained at a level consistent with management's best estimate of probable loan losses to be incurred as of the balance sheet date. Management assesses FNB's ALL quarterly. This assessment includes a methodology that separates the total loan portfolio into homogeneous loan classifications for purposes of evaluating risk. The required allowance is calculated by applying a risk adjusted reserve requirement to the dollar volume of loans within a homogenous group. For purposes of the ALL, FNB has grouped its loans into pools according to the loan segmentation regime employed on schedule RC-C of the FFIEC's Consolidated Report of Condition and Income. Major loan portfolio subgroups include: risk graded commercial loans, mortgage loans, home equity loans, retail loans and retail credit lines. Management also analyzes the loan portfolio on an ongoing basis to evaluate current risk levels, and risk grades are adjusted accordingly. While management uses the best information available to make evaluations, future adjustments may be necessary, if economic or other conditions differ substantially from the assumptions used.

As of September 30, 2012, FNB has elected to change the method it uses to calculate the historical loss rates and qualitative and environmental factors in its ALL. FNB had previously calculated the ALL using historical loss factors based on the risk-graded pool to which the loss was assigned at quarter-end four quarters prior to the loss. Historical loss rates are now calculated by associating losses to the risk-graded pool to which they relate for each of the previous eight quarters. Then, using a 24-quarter look back period, loss factors are calculated for each risk-graded pool.

In addition to FNB's ability to use its own historical loss data and migration between risk grades, it has also set up a more rigorous process for computing the qualitative factors that impact the ALL. A committee, independent of the historical loss migration team, reviews risk factors that may impact the ALL. Some factors are statistically quantifiable, such as concentration, growth, delinquency, and nonaccrual risk by loan type, while other factors are qualitative in nature, such as staff competency, competition within our markets, economic and regulatory changes impacting the loans held for investment.

The impact of the change in methodology to the third quarter earnings and to the ALL was to reduce the provision for loan losses and the ALL by an immaterial amount.

12

FNB lends primarily in North Carolina. As of September 30, 2012, a substantial majority of the principal amount of the loans held for investment in its portfolio was to businesses and individuals in North Carolina. This geographic concentration subjects the loan portfolio to the general economic conditions within this area. The risks created by this concentration have been considered by management in the determination of the adequacy of the ALL. Management believes the ALL is adequate to cover estimated losses on loans at each balance sheet date.

During the three month period ended September 30, 2012, FNB charged off $9.3 million in loans and realized $1.6 million in recoveries, for $7.7 million of net charge-offs. The majority of the loans charged off were loans that had been in impairment status and had specific reserves assigned in prior periods.

The ALL, as a percentage of loans held for investment, was 2.51% at September 30, 2012, compared to 4.95% at September 30, 2011. At December 31, 2011, the ALL, as a percentage of loans held for investment, was 3.23%.

Risk Grades

The risk-grade categories presented in the following table, which are standard categories used by the bank regulators, are:

Pass - Loans categorized as Pass are higher quality loans that have adequate sources of repayment and little risk of collection.

Special Mention - A Special Mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that FNB will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of Substandard loans, does not have to exist in individual assets classified Substandard.

Doubtful - A loan classified as Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors, which may work to the advantage of strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

Loans categorized as Special Mention or worse are considered Criticized. Loans categorized as Substandard or Doubtful are considered Classified. Purchased loans acquired in the Merger are recorded at estimated fair value on the date of acquisition without the carryover of related ALL. The table below includes $70.0 million and $63.6 million in Granite Purchased Loans categorized as Substandard or Doubtful at September 30, 2012 and December 31, 2011, respectively.

13

The following table presents loans held for investment balances by risk grade as of September 30, 2012:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	60,547	$	3,964	$	8,154	$	4	$	72,669
Real estate - construction	38,622		1,944		20,697		—		61,263
Real estate - mortgage:
1-4 family residential	534,269		17,873		37,844		265		590,251
Commercial	302,943		57,647		102,439		144		463,173
Consumer	43,612		188		374		265		44,439
Total	$	979,993	$	81,616	$	169,508	$	678	$	1,231,795

The following table presents loans held for investment balances by risk grade as of December 31, 2011:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	77,305	$	7,373	$	9,921	$	490	$	95,089
Real estate - construction	53,105		5,797		33,886		18		92,806
Real estate - mortgage:
1-4 family residential	385,022		25,864		42,630		209		453,725
Commercial	351,731		91,364		87,971		317		531,383
Consumer	43,487		279		387		379		44,532
Total	$	910,650	$	130,677	$	174,795	$	1,413	$	1,217,535

Loans included in the preceding loan composition table are net of participations sold. Loans are increased by net loan premiums and deferred loan discounts or fees of $2.6 million at September 30, 2012. Loans are decreased by net deferred loan discounts or fees of $1.8 million at December 31, 2011.

At September 30, 2012 loans held for sale consisted of originated residential mortgage loans held for sale at the lower of cost or fair market value. At December 31, 2011, loans held for sale consisted of nonperforming loans transferred from loans held for investment under sales contracts recorded at the contractual sales price.

Loans serviced for others are not included in the consolidated balance sheet. The unpaid principal balance of loans serviced for others amounted to $33.6 million at September 30, 2012 and $2.0 million at December 31, 2011.

Loans Pledged

To borrow from the FHLB, members must pledge collateral to secure advances and letters of credit. Acceptable collateral includes, among other types of collateral, a variety of residential, multifamily, home equity lines and second mortgages, and commercial loans. Gross loans of $293.1 million and $339.4 million were pledged to collateralize FHLB advances and letters of credit at September 30, 2012 and December 31, 2011, respectively, of which there was $23.9 million and $69.5 million of credit availability for borrowing, respectively. At September 30, 2012, $40.9 million of loans and $4.0 million of securities were pledged to collateralize potential borrowings from the Federal Reserve Discount Window, of which $26.2 million was available as borrowing capacity.

Nonaccruing and Impaired Loans

Interest income on loans is calculated by using the interest method based on the daily outstanding balance. The recognition of interest income is discontinued when, in management's opinion, the collection of all or a portion of interest becomes doubtful. Loans are returned to accrual status when the factors indicating doubtful collectability cease to exist and the loan has performed in accordance with its terms for a demonstrated period of time. The past due status of loans is based on the contractual payment terms. Had nonaccruing loans been on accruing status, interest income would have been higher by $1.5 million and $3.5 million for the three months ended September 30, 2012 and September 30, 2011, respectively, and higher by $2.9 million and $7.6 million for the nine months ended September 30, 2012 and September 30, 2011, respectively. At September 30, 2012 and December 31, 2011, FNB had certain impaired loans of $85.1 million and $103.0 million, respectively, which were on nonaccruing interest status.

14

All loan classes are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date. When FNB cannot reasonably expect full and timely repayment of its loan, the loan is placed on nonaccrual.

All loan classes on which principal or interest is in default for 90 days or more are put on nonaccrual status, unless there is sufficient documentation to conclude that the loan is well secured and in the process of collection. A debt is "well-secured" if collateralized by liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt in full; or by the guarantee of a financially responsible party. A debt is "in process of collection" if collection is proceeding in due course either through legal action, including judgment enforcement procedures, or, in appropriate circumstances, through collection efforts not involving legal action that are reasonably expected to result in repayment of the debt or its restoration to a current status.

Loans that are less than 90 days delinquent may also be placed on nonaccrual if deterioration in the financial condition of the borrower has increased the probability of less than full repayment.

At the time a loan is placed on nonaccrual, all accrued, unpaid interest is charged off, unless it is documented that repayment of all principal and presently accrued but unpaid interest is probable. Charge-offs of accrued and unpaid interest are charged against the current year's interest income and not against the current ALL.

For all loan classes, a nonaccrual loan may be returned to accrual status when FNB can reasonably expect continued timely payments until payment in full. All prior arrearage does not have to be eliminated, nor do all previously charged-off amounts need to have been recovered, but the loan can still be returned to accrual status if the following conditions are met: (1) all principal and interest amounts contractually due (including arrearage) are reasonably assured of repayment within a reasonable period; and (2) there is a sustained period of repayment performance (generally a minimum of six months) by the borrower, in accordance with the contractual terms involving payments of cash or cash equivalents.

For all classes within all loan portfolios, cash receipts received on nonaccrual loans are applied entirely against principal until the loan or lease has been collected in full, after which time any additional cash receipts are recognized as interest income.

For all loan classes, as soon as any loan becomes uncollectible, the loan will be charged down or charged off as follows:

• If unsecured, the loan must be charged off in full.

• If secured, the outstanding principal balance of the loan should be charged down to the net liquidation value of the collateral.

Loans should be considered uncollectible when:

• No regularly scheduled payment has been made within four months and the determination is made that any further payment is unlikely, or

• The loan is unsecured, the borrower has filed for bankruptcy protection and there is no other (guarantor, etc.) support from an entity outside of the bankruptcy proceedings.

Based on a variety of credit, collateral and documentation issues, loans with lesser degrees of delinquency or obvious loss may also be deemed uncollectible.

The following table presents an aging analysis of accruing and nonaccruing loans as of September 30, 2012:

	Past Due
(dollars in thousands)											PI Loans						90 or more
	30-59 Days		60-89 Days		90 or More Days		Total		Current		No credit deterior- ation		Credit deterior-ation		Total Loans		days past due and Accruing
Commercial and agricultural	$	927	$	832	$	2,511	$	4,270	$	51,718	$	1,021	$	15,660	$	72,669	$	671
Real estate - construction	605		1,503		15,842		17,950		40,549		543		2,221		61,263		—
Real estate - mortgage:
1-4 family residential	972		2,772		13,942		17,686		530,027		39,943		2,595		590,251		58
Commercial	3,221		1,872		31,316		36,409		237,940		177,533		11,291		463,173		339
Consumer	174		13		113		300		42,741		1,364		34		44,439		3
Total	$	5,899	$	6,992	$	63,724	$	76,615	$	902,975	$	220,404	$	31,801	$	1,231,795	$	1,071

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 2011:

15

	Past Due
(dollars in thousands)											PI Loans						90 or more
	30-59 Days		60-89 Days		90 or More Days		Total		Current		No credit deterior- ation		Credit deterior-ation		Total Loans		days past due and Accruing
Commercial and agricultural	$	335	$	425	$	2,755	$	3,515	$	62,702	$	28,872	$	—	$	95,089	$	305
Real estate - construction	1,850		2,206		21,438		25,494		59,671		7,641		—		92,806		1,400
Real estate - mortgage:
1-4 family residential	4,544		2,253		14,125		20,922		379,909		52,894		—		453,725		292
Commercial	2,926		6,645		16,330		25,901		265,861		239,621		—		531,383		1,003
Consumer	740		278		63		1,081		41,643		1,808		—		44,532		—
Total	$	10,395	$	11,807	$	54,711	$	76,913	$	809,786	$	330,836	$	—	$	1,217,535	$	3,000

A loan is considered impaired, based on current information and events, if it is probable that FNB will be unable to collect the scheduled payments or principal and interest when due according to the contractual terms of the loan agreement.If the loan has been modified to provide relief to the borrower, the loan is deemed to be impaired if all principal and interest will not be repaid according to the original contract. All loans meeting the definition of Doubtful should be considered impaired.

When a loan has been determined to be impaired, the amount of the impairment is measured using the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, the observable market price of the loan, or the fair value of the collateral if the loan is collateral dependent. When the present value of expected future cash flows is used, the effective interest rate is the original contractual interest rate of the loan adjusted for any premium or discount. When the contractual interest rate is variable, the effective interest rate of the loan changes over time. A specific reserve is established as a component of the ALL when a loan has been determined to be impaired. Subsequent to the initial measurement of impairment, if there is a significant change to the impaired loan's expected future cash flows, or if actual cash flows are significantly different from the cash flows previously estimated, FNB recalculates the impairment and appropriately adjusts the specific reserve. Similarly, if FNB measures impairment based on the observable market price of an impaired loan or the fair value of the collateral of an impaired collateral-dependent loan, FNB will adjust the specific reserve if there is a significant change in either of those bases.

When a loan is impaired and principal and interest is in doubt when contractually due, interest income is not recognized. Cash receipts received on nonaccruing impaired loans within any class are generally applied entirely against principal until the loan has been collected in full, after which time any additional cash receipts are recognized as interest income. Cash receipts received on accruing impaired loans within any class are applied in the same manner as accruing loans that are not considered impaired.

The following table summarizes information relative to impaired loans for the quarters ended on the dates indicated:

	September 30, 2012				December 31, 2011
(dollars in thousands)	Balance		Associated Reserves		Balance		Associated Reserves
Impaired loans, held for sale	$	—	$	—	$	4,529	$	—
Impaired loans, not individually reviewed for impairment	7,274		—		5,127		—
Impaired loans, individually reviewed, with no impairment	72,402		—		53,884		—
Impaired loans, individually reviewed, with impairment	14,769		4,522		42,357		11,090
Total impaired loans, excluding purchased impaired *	$	94,445	$	4,522	$	105,897	$	11,090
Purchased impaired loans with subsequent deterioration	$	31,801	3,296		$	—	—
Purchased impaired loans with no subsequent deterioration	$	220,404	—		$	330,836	—
Total Reserves			$	7,818			$	11,090
Average impaired loans calculated using a simple average	$	98,567			$	112,600

* Included at September 30, 2012 and December 31, 2011 were $3.6 million and $2.9 million, respectively, in restructured and performing loans.

The following table presents loans held for investment on nonaccrual status by loan class for the dates indicated below:

16

(dollars in thousands)	September 30,		December 31,
	2012		2011
Loans held for investment:
Commercial and agricultural	$	2,476	$	4,636
Real estate - construction	18,506		30,844
Real estate - mortgage:
1-4 family residential	22,073		26,048
Commercial	41,794		36,666
Consumer	223		250
Total nonaccrual loans	$	85,072	$	98,444
Loans more than 90 days delinquent, still on accrual	$	1,071	$	3,000
Total nonperforming loans	$	86,143	$	101,444

The following table presents loans held for sale on nonaccrual status by loan class for the dates indicated below:

(dollars in thousands)	September 30,		December 31,
	2012		2011
Loans held for sale:
Real estate - construction	$	—	$	1,807
Real estate - mortgage:
1-4 family residential	—		517
Commercial	—		2,205
Consumer	—		—
Total	$	—	$	4,529

17

The following table presents individually reviewed impaired loans and purchased impaired loans with subsequent credit deterioration, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of September 30, 2012:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	1,295	$	2,017	$	—
Real estate - construction	14,887		20,816		—
Real estate - mortgage:
1-4 family residential	13,923		16,640		—
Commercial	42,297		50,861		—
Consumer	—		234		—
Total	$	72,402	$	90,568	$	—
With an allowance recorded:
Commercial and agricultural	$	1,272	$	1,280	$	815
Real estate - construction	2,623		2,914		1,158
Real estate - mortgage:
1-4 family residential	6,091		7,272		1,797
Commercial	4,683		4,758		652
Consumer	100		100		100
Total	$	14,769	$	16,324	$	4,522
Total individually evaluated impaired loans
Commercial and agricultural	$	2,567	$	3,297	$	815
Real estate - construction	17,510		23,730		1,158
Real estate - mortgage:
1-4 family residential	20,014		23,912		1,797
Commercial	46,980		55,619		652
Consumer	100		334		100
Total	$	87,171	$	106,892	$	4,522
PI loans with subsequent credit deterioration:
Commercial and agricultural	$	15,660	$	15,685	$	1,774
Real estate - construction	2,221		2,195		135
Real estate - mortgage:
1-4 family residential	2,595		2,879		604
Commercial	11,291		11,829		749
Consumer	34		44		34
Total	$	31,801	$	32,632	$	3,296

18

The following table presents individually reviewed impaired loans, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of December 31, 2011:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	2,354	$	4,346	$	—
Real estate - construction	16,351		25,714		—
Real estate - mortgage:
1-4 family residential	13,003		19,657		—
Commercial	22,176		26,964		—
Consumer	—		102		—
Total	$	53,884	$	76,783	$	—
With an allowance recorded:
Commercial and agricultural	$	1,536	$	2,047	$	1,506
Real estate - construction	14,109		14,718		4,899
Real estate - mortgage:
1-4 family residential	11,883		12,328		2,140
Commercial	14,659		14,943		2,415
Consumer	170		172		130
Total	$	42,357	$	44,208	$	11,090
Total individually evaluated impaired loans
Commercial and agricultural	$	3,890	$	6,393	$	1,506
Real estate - construction	30,460		40,432		4,899
Real estate - mortgage:
1-4 family residential	24,886		31,985		2,140
Commercial	36,835		41,907		2,415
Consumer	170		274		130
Total	$	96,241	$	120,991	$	11,090

There were no PI loans with subsequent credit deterioration at December 31, 2011.

19

The following summary includes impaired loans individually reviewed as well as impaired loans held for sale. Average recorded investment and interest income recognized on impaired loans, segregated by portfolio segment, is shown in the following table as of September 30, 2012 and September 30, 2011:

	For Three Months Ended				For Three Months Ended
	September 30, 2012				September 30, 2011
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	1,557	$	56	$	2,417	$	—
Real estate - construction	15,484		104		29,789		—
Real estate - mortgage:
1-4 family residential	14,265		81		13,585		—
Commercial	44,480		567		29,453		—
Consumer	162		4		98		—
Total	$	75,948	$	812	$	75,342	$	—
With an allowance recorded:
Commercial and agricultural	$	1,274	$	6	$	2,751	$	—
Real estate - construction	2,802		9		47,884		—
Real estate - mortgage:
1-4 family residential	6,436		41		16,268		—
Commercial	4,689		27		21,647		—
Consumer	100		1		311		—
Total	$	15,301	$	84	$	88,861	$	—
Total:
Commercial and agricultural	$	2,831	$	62	$	5,168	$	—
Real estate - construction	18,286		113		77,673		—
Real estate - mortgage:
1-4 family residential	20,701		122		29,853		—
Commercial	49,169		594		51,100		—
Consumer	262		5		409		—
Total	$	91,249	$	896	$	164,203	$	—

20

	For Nine Months Ended				For Nine Months Ended
	September 30, 2012				September 30, 2011
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	1,879	$	152	$	3,305	$	—
Real estate - construction	18,140		350		49,617		—
Real estate - mortgage:
1-4 family residential	15,096		292		18,628		1
Commercial	46,051		1,388		49,736		1
Consumer	279		6		196		—
Total	$	81,445	$	2,188	$	121,482	$	2
With an allowance recorded:
Commercial and agricultural	$	1,266	$	36	$	5,803	$	—
Real estate - construction	2,873		32		60,131		—
Real estate - mortgage:
1-4 family residential	6,869		163		16,027		—
Commercial	4,687		145		42,990		1
Consumer	95		2		231		—
Total	$	15,790	$	378	$	125,182	$	1
Total:
Commercial and agricultural	$	3,145	$	188	$	9,108	$	—
Real estate - construction	21,013		382		109,748		—
Real estate - mortgage:
1-4 family residential	21,965		455		34,655		1
Commercial	50,738		1,533		92,726		2
Consumer	374		8		427		—
Total	$	97,235	$	2,566	$	246,664	$	3

Impaired loans also include loans for which FNB may elect to grant a concession, providing terms more favorable than those prevalent in the market (e.g., rate, amortization term), and formally restructure due to the weakening credit status of a borrower. Restructuring is designed to facilitate a repayment plan that minimizes the potential losses that FNB otherwise may have to incur. If these impaired loans are on nonaccruing status as of the date of restructuring, the loans are included in nonperforming loans. Nonperforming restructured loans will remain as nonperforming until the borrower can demonstrate adherence to the restructured terms for a period of no less than six months and when it is otherwise determined that continued adherence is reasonably assured. Some restructured loans continue as accruing loans after restructuring if the borrower is not past due at the time of restructuring, adequate collateral valuations support the restructured loans, and the cash flows of the underlying business appear adequate to support the restructured debt service. Not included in nonperforming loans are loans that have been restructured that were performing as of the restructure date. At September 30, 2012, there was $21.4 million in restructured loans, of which $3.6 million in loans were accruing and in a performing status. At December 31, 2011, there was $28.3 million in restructured loans, of which $2.9 million in loans were accruing and in a performing status.

Sale of Problem Loans

During 2011 and 2012, FNB sold loans to third party buyers in order to reduce its problem loan exposure. These loans were transferred to loans held for sale at the time FNB received a signed contract for the purchase of the loans. Prior to transferring these loans to loans held for sale, the loans were marked down to the contract price less associated selling costs. All transactions were conducted at arm's length and loans were sold without recourse.

The following table presents sold loans by portfolio segment for the periods indicated below:

21

	For Three Months Ended September 30, 2012					For Three Months Ended September 30, 2011
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	9	$	217	$	1,238
Real estate - construction	—	—		—		8	6,406		4,927
Real estate - mortgage:
1-4 family residential						—	—		—
Commercial	1	602		540		5	6,723		4,839
Consumer	—	—		—		1	96		190
Total	1	$	602	$	540	23	$	13,442	$	11,194

	For Nine Months Ended September 30, 2012					For Nine Months Ended September 30, 2011
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	14	$	3,505	$	3,190
Real estate - construction	—	—		—		13	16,723		11,899
Real estate - mortgage:
1-4 family residential	7	1,865		1,896		1	1,335		900
Commercial	2	4,402		4,590		8	12,071		10,186
Consumer	—	—		—		1	96		190
Total	9	$	6,267	$	6,486	37	$	33,730	$	26,365

During the three-month period ending September 30, 2012, one non-performing loan was placed under contract for sale, and was sold during the quarter.

Granite Purchased Loans

Granite Purchased Loans include PI Loans and PC Loans. PC Loans included performing revolving consumer and commercial loans on the acquisition date.

PI Loans are segregated into pools and recorded at estimated fair value on the date of acquisition without the carryover of the related ALL. PI Loans are accounted for under ASC 310-30 when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition we will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the date of acquisition may include statistics such as past due status, nonaccrual status and risk grade. PI Loans generally meet FNB's definition for nonaccrual status; however, even if the borrower is not currently making payments, FNB will classify loans as accruing if we can reasonably estimate the amount and timing of future cash flows.The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference.

Periodically, we estimate the expected cash flows for each pool of the PI Loans and evaluate whether the expected cash flows for each pool have changed from prior estimates. Decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or reclassification from nonaccretable difference to accretable yield with a positive impact on future interest income. Excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

We have elected to account for the Granite Purchased PI Loans under ASC 310-30 and the Granite Purchased PC Loans under ASC 310-20.

At September 30, 2012, our financial statements reflected a PI Loan ALL of $3.3 million and an ALL for originated and PC Loans of $0.5 million. All Granite Purchased PI Loans are presented on an accruing basis.

The following table presents the balance of all Granite Purchased Loans:

22

	At September 30, 2012
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	16,681	$	6,425	$	23,106	$	22,955
Real estate - construction	2,764		—		2,764		2,833
Real estate - mortgage:
1-4 family residential	42,538		28,672		71,210		74,075
Commercial	188,824		—		188,824		197,006
Consumer	1,398		—		1,398		1,284
Total	$	252,205	$	35,097	$	287,302	$	298,153

	At December 31, 2011
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	28,872	$	8,061	$	36,933	$	39,531
Real estate - construction	7,641		—		7,641		8,413
Real estate - mortgage:
1-4 family residential	52,894		34,590		87,484		93,310
Commercial	239,621		—		239,621		261,076
Consumer	1,808		1		1,809		1,800
Total	$	330,836	$	42,652	$	373,488	$	404,130

The tables below include only those Granite Purchased Loans accounted for under the expected cash flow method (PI Loans) for the periods indicated. These tables do not include PC Loans, including Granite Purchased PC Loans or purchased performing residential mortgage loans.

	For Nine Months Ended September 30, 2012						For Nine Months Ended December 31, 2011
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	330,836		$	47,804		$	—		$	—
Addition from Bank of Granite Corp acquisition	—			—			351,121			52,581
Accretion	15,831			(15,831		)	4,777			(4,777		)
Increase in future accretion	—			4,592			—			—
Payments received	(84,944		)	—			(24,467		)	—
Foreclosed and transferred to OREO	(9,518		)	—			(595		)	—
Subtotal before allowance	252,205			36,565			330,836			47,804
Allowance for credit losses	(3,296		)	—			—			—
Net carrying amount, end of period	$	248,909		$	36,565		$	330,836		$	47,804

Allowance for Loan Losses

An analysis of the changes in the ALL is as follows:

23

	For Three Months Ended						For Nine Months Ended
(dollars in thousands)	September 30,						September 30,
	2012			2011			2012			2011
Balance, beginning of period	$	38,551		$	59,366		$	39,360		$	93,687
Provision for losses charged to continuing operations	32			7,181			10,877			60,944
Net charge-offs:
Charge-offs	(9,276		)	(24,376		)	(23,580		)	(115,948		)
Recoveries	1,552			1,950			4,202			5,438
Net charge-offs	(7,724		)	(22,426		)	(19,378		)	(110,510		)
Balance, end of period	$	30,859		$	44,121		$	30,859		$	44,121
Annualized net charge-offs during the period to average loans	2.46		%	9.07		%	2.06		%	13.09		%
Annualized net charge-offs during the period to ALL	100.12		%	201.66		%	83.73		%	334.88		%
Allowance for loan losses to loans held for investment (1)	2.51		%	4.95		%	2.51		%	4.95		%

(1) Excludes discontinued operations.

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2012:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at July 1, 2012	$	7,151		$	11,320		$	8,784		$	9,218		$	2,078		$	38,551
Charge-offs	(1,156		)	(2,465		)	(1,646		)	(2,602		)	(1,407		)	(9,276		)
Recoveries	286			323			69			388			486			1,552
Provision	(1,128		)	(3,195		)	2,787			54			1,514			32
Ending balance at September 30, 2012	$	5,153		$	5,983		$	9,994		$	7,058		$	2,671		$	30,859

24

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2011:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at July 1, 2011	$	6,527		$	28,419		$	9,030		$	13,619		$	1,771		$	59,366
Charge-offs	(1,988		)	(13,740		)	(1,958		)	(5,848		)	(842		)	(24,376		)
Recoveries	226			1,217			59			96			352			1,950
Provision	204			4,606			(134		)	2,259			246			7,181
Ending balance at September 30, 2011	$	4,969		$	20,502		$	6,997		$	10,126		$	1,527		$	44,121

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2012:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2012	$	5,776		$	11,995		$	8,885		$	11,063		$	1,641		$	39,360
Charge-offs	(2,774		)	(8,761		)	(4,805		)	(3,594		)	(3,646		)	(23,580		)
Recoveries	777			1,169			447			725			1,084			4,202
Provision	1,374			1,580			5,467			(1,136		)	3,592			10,877
Ending balance at September 30, 2012	$	5,153		$	5,983		$	9,994		$	7,058		$	2,671		$	30,859

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2011:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2011	$	11,144		$	46,792		$	7,742		$	26,851		$	1,158		$	93,687
Charge-offs	(10,455		)	(57,912		)	(8,579		)	(36,028		)	(2,974		)	(115,948		)
Recoveries	759			2,121			621			838			1,099			5,438
Provision	3,521			29,501			7,213			18,465			2,244			60,944
Ending balance at September 30, 2011	$	4,969		$	20,502		$	6,997		$	10,126		$	1,527		$	44,121

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment methodology at September 30, 2012:

25

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	815	$	1,158	$	1,797	$	652	$	100	$	4,522
Collectively evaluated for impairment	2,564		4,690		7,593		5,657		2,537		23,041
PI loans evaluated for credit impairment	1,774		135		604		749		34		3,296
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL evaluated for impairment	$	5,153	$	5,983	$	9,994	$	7,058	$	2,671	$	30,859
Loans held for investment
Individually evaluated for impairment	$	2,567	$	17,510	$	20,014	$	46,980	$	100	$	87,171
Collectively evaluated for impairment	53,421		40,989		527,699		227,369		42,941		892,419
PI loans with subsequent credit deterioration	15,660		2,221		2,595		11,291		34		31,801
PI loans with no credit deterioration	1,021		543		39,943		177,533		1,364		220,404
Total loans evaluated for impairment	$	72,669	$	61,263	$	590,251	$	463,173	$	44,439	$	1,231,795

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment methodology at December 31, 2011:

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	1,506	$	4,899	$	2,140	$	2,415	$	130	$	11,090
Collectively evaluated for impairment	4,270		7,096		6,745		8,648		1,511		28,270
PI loans evaluated for credit impairment	—		—		—		—		—		—
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL evaluated for impairment	$	5,776	$	11,995	$	8,885	$	11,063	$	1,641	$	39,360
Loans held for investment
Individually evaluated for impairment	$	3,890	$	30,460	$	24,886	$	36,835	$	170	$	96,241
Collectively evaluated for impairment	62,327		54,705		375,945		254,927		42,554		790,458
PI loans with subsequent credit deterioration	—		—		—		—		—		—
PI loans with no credit deterioration	28,872		7,641		52,894		239,621		1,808		330,836
Total loans evaluated for impairment	$	95,089	$	92,806	$	453,725	$	531,383	$	44,532	$	1,217,535

Troubled Debt Restructuring

The following table presents a breakdown of troubled debt restructurings that were restructured during the three months ended September 30, 2012, segregated by portfolio segment:

26

	For Three Months Ended September 30, 2012					For Three Months Ended September 30, 2011
		Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
		Outstanding		Outstanding				Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number		Recorded		Recorded
	of Loans	Investment		Investment		of Loans		Investment		Investment
Commercial and agricultural	—	$	—	$	—	$	—	$	—	$	—
Real estate - construction	—	—		—		—		—		—
Real estate - mortgage:
1-4 family residential	1	202		202		1		155		155
Commercial	—	—		—		2		1,651		1,651
Consumer	—	—		—		—		—		—
Total	1	$	202	$	202	$	3	$	1,806	$	1,806

The following table presents a breakdown of troubled debt restructurings that were restructured during the nine months ended September 30, 2012, segregated by portfolio segment:

	For Nine Months Ended September 30, 2012					For Nine Months Ended September 30, 2011
		Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
		Outstanding		Outstanding				Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number		Recorded		Recorded
	of Loans	Investment		Investment		of Loans		Investment		Investment
Commercial and agricultural	—	$	—	$	—	$	6	$	555	$	555
Real estate - construction	9	2,526		1,603		6		3,612		3,612
Real estate - mortgage:
1-4 family residential	3	260		260		8		401		401
Commercial	8	1,356		1,353		13		7,904		7,904
Consumer	—	—		—		—		—		—
Total	20	$	4,142	$	3,216	$	33	$	12,472	$	12,472

During the three months ended September 30, 2012, FNB modified 1 loan that was considered to be a troubled debt restructuring. FNB extended the terms for this loan, but did not modify the interest rate. During the nine months ended September 30, 2012, FNB modified twenty loans that was considered to be troubled debt restructurings. FNB extended the terms for sixteen of these loans, the interest rate was lowered for two of these loans, and the two remaining loans were modified both ways.

There were no loans restructured in the twelve months prior to September 30, 2012 that went into default during the three months or nine months ended September 30, 2012. There were also no loans restructured in the twelve months prior to September 30, 2011 that went into default during the three months or nine months ended September 30, 2011 .

In the determination of the ALL, management considers troubled debt restructurings and any subsequent defaults in these restructurings as impaired loans. The amount of the impairment is measured using the present value of expected future cash flows discounted at the loan's effective interest rate, the observable market price of the loan, or the fair value of the collateral if the loan is collateral dependent.

Unfunded Commitments

The reserve for unfunded commitments, which is included in other liabilities, is calculated by determining the type of commitment and the remaining unfunded commitment for each loan. Based on the type of commitment, an expected usage percentage to the remaining unfunded balance is applied. The expected usage percentage is multiplied by the historical losses and qualitative and environmental factors for each loans pool as defined in the regular ALL calculation to determine the appropriate level of reserve. The expected usage percentages for each commitment type are as follows:

• Construction draws - 100%

• Equity lines of credit - 50%

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• Letters of Credit - 10%

The reserve for unfunded commitments was $0.9 million as of September 30, 2012 and $0.6 million at December 31, 2011.

6. Other Real Estate Owned and Personal Property Acquired in Settlement of Loans

Other Real Estate Owned ("OREO") consists of real estate acquired through foreclosure or deed in lieu thereof. The property is classified as held for sale. The property is initially carried at fair value based on recent appraisals, less estimated costs to sell. Declines in the fair value of properties included in other real estate below carrying value are recognized by a charge to income.

Total OREO and personal property acquired in settlement of loans decreased $29.6 million during the first nine months of 2012 from $110.4 million at December 31, 2011, to $80.8 million at September 30, 2012. This represents 48% of total nonperforming assets. At December 31, 2011, OREO and personal property acquired in settlement of loans represented 51% of total nonperforming assets.

The following table summarizes OREO and personal property acquired in settlement of loans at the periods indicated:

(dollars in thousands)	September 30, 2012		December 31, 2011
Real estate acquired in settlement of loans	$	80,482	$	110,009
Personal property acquired in settlement of loans	318		377
Total property acquired in settlement of loans	$	80,800	$	110,386

The following tables summarize the changes in real estate acquired in settlement of loans at the periods indicated:

	For Three Months Ended
(dollars in thousands)	September 30, 2012			September 30, 2011
Real estate acquired in settlement of loans, beginning of period	$	86,183		$	101,384
Plus: New real estate acquired in settlement of loans	9,746			27,278
Less: Sales of real estate acquired in settlement of loans	(13,826		)	(29,122		)
Less: Write-downs and net loss on sales charged to expense	(1,621		)	(3,441		)
Real estate acquired in settlement of loans, end of period	$	80,482		$	96,099

	For Nine Months Ended
(dollars in thousands)	September 30, 2012			September 30, 2011
Real estate acquired in settlement of loans, beginning of period	$	110,009		$	62,058
Plus: New real estate acquired in settlement of loans	24,766			101,245
Less: Sales of real estate acquired in settlement of loans	(38,202		)	(39,521		)
Less: Write-downs and net loss on sales charged to expense	(16,091		)	(27,683		)
Real estate acquired in settlement of loans, end of period	$	80,482		$	96,099

At September 30, 2012, 58 assets with a net carrying amount of $18.2 million were under contract for sale. Estimated losses on these sales have been recognized in the Consolidated Statements of Operations in the first nine months of 2012.

7. Earnings Per Share

Basic net loss per share, or basic earnings/(loss) per share (“EPS”), is computed by dividing net loss to common shareholders by the weighted average number of common shares outstanding for the period. FNB retired its preferred stock in 2011 and there were no unpaid preferred dividends or accretion of preferred stock discount at September 30, 2012. At September 30, 2011, FNB had $4.2 million of unpaid cumulative dividends on its Series A preferred stock and had $0.6 million in accretion of the discount on the preferred stock.

Diluted EPS reflects the potential dilution that could occur if FNB's potential common stock, which consists of dilutive stock options and a common stock warrant, were issued. As required for entities with complex capital structures, a dual presentation of basic and diluted EPS is included on the face of the income statement, and a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation is provided in this note.

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(dollars in thousands, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss from continuing operations before cumulative dividends on preferred stock	$	(4,712	)	$	(13,890	)	$	(33,682	)	$	(100,889	)
Dividends on preferred stock	—			(1,093		)	—			(3,197		)
Loss from continuing operations, net of tax	(4,712		)	(14,983		)	(33,682		)	(104,086		)
Loss from discontinued operations, net of tax	—			(40		)	(27		)	(5,722		)
Net loss to common shareholders	$	(4,712	)	$	(15,023	)	$	(33,709	)	$	(109,808	)
Weighted average number of common shares outstanding - basic and diluted	21,588,027			114,320			21,294,727			114,277
Net loss per common share from continuing operations - basic and diluted	$	(0.22	)	$	(131.06	)	$	(1.58	)	$	(910.82	)
Net loss per common share from discontinued operations - basic and diluted	—			(0.35		)	—			(50.07		)
Net loss per common share - basic and diluted	(0.22		)	(131.41		)	(1.58		)	(960.89		)

As a result of the net loss for the three and nine months ended September 30, 2012 and 2011, all stock options and the common stock warrant were considered antidilutive and thus are not included in this calculation. For the three and nine months ended September 30, 2012 there were 23,347 and 23,552 antidilutive shares, respectively. For the three and nine months ended September 30, 2011, there were 26,821 and 27,218 antidilutive shares, respectively. Of the antidilutive shares, the number of shares relating to stock options were 1,275 and 1,480 for the three months and nine months ended September 30, 2012, respectively, and 4,750 for the three months and nine months ended September 30, 2011.

Net loss to common shareholders increased for the three months ended September 30, 2011 by $1.1 million, and for the nine months ended September 30, 2011 by $3.2 million for preferred stock dividends. Accretion on the preferred stock discount associated with the preferred stock of $0.2 million and $0.6 million was recognized for the three and nine months ended September 30, 2011, respectively. FNB retired its preferred stock in 2011 and there were no preferred stock dividends or accretion on the preferred stock discount for the three and nine months ended September 30, 2012.

8. Derivatives and Financial Instruments

A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. These instruments include interest rate swaps, caps, floors, collars, options or other financial instruments designed to hedge exposures to interest rate risk or for speculative purposes.

Accounting guidance requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet, and measure those instruments at fair value. Changes in the fair value of those derivatives are reported in current earnings or other comprehensive income depending on the purpose for which the derivative is held and whether the derivative qualifies for hedge accounting.

For the three and nine months ended September 30, 2011, the interest rate swaps designated as a fair value hedge resulted in decreased interest expense of $175,000 and $629,000, respectively, on FHLB advances than would otherwise have been recognized for the liability. The fair value of the swaps at September 30, 2011 was recorded on the Consolidated Balance Sheets as an asset in the amount of $0.8 million.

Because the swaps were terminated in 2011, there were no net gains or losses recognized on the fair value swaps for the three and nine months ended September 30, 2012. However, net gains recognized on the fair value swaps during the nine months ended September 30, 2011 were $933,000.

Mortgage banking derivatives used in the ordinary course of business consist of mandatory forward sales contracts or forward contracts and rate lock loan commitments. The fair value of FNB's derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants.

The table below provides data about the amount of gains and losses related to derivative instruments designated as hedges included in “Other income” in the FNB's Consolidated Statements of Operations:

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	Gain, Net of Tax
	Recognized in Income
(dollars in thousands)	For Three Months Ended				For Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Derivatives designated as hedging instruments:
Interest rate swap contracts - FHLB advances	$	—	$	463	$	—	$	565

Continuing Operations

During 2012, FNB began originating residential mortgage loans for sale in the secondary market. FNB has established guidelines in originating, selling loans to Fannie Mae, and retaining or selling the loan servicing rights. The commitments to borrowers to originate residential mortgage loans and the forward sales commitments to investors are freestanding derivative instruments. As such, they do not qualify for hedge accounting treatment, and the fair value adjustments for these instruments is recorded through the income statement in mortgage loan income. The fair market value of mortgage banking derivatives at September 30, 2012 was recorded in the consolidated balance sheet under Other Assets.

	Gain (Loss) recognized
(dollars in thousands)	For Three Months Ended					For Nine Months Ended
	September 30, 2012			September 30, 2011		September 30, 2012			September 30, 2011
Derivatives not designated as hedging instruments:
Mortgage loan rate lock commitments (1)	$	134		$	—	$	311		$	55
Mortgage loan forward sales and MBS (1)	(134		)	—		(311		)	(44		)
Total	$	—		$	—	$	—		$	11

(1) For 2011, recognized in "Net loss from discontinued operations" in FNB's Consolidated Statements of Operations.

Discontinued Operations

On April 7, 2009, Dover irrevocably opted to elect the fair value option for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. This election allowed Dover to enter into a hedging arrangement for the purpose of limiting risk inherent in the mortgage loan pipeline and loans held for sale portfolio.

Dover originated certain residential mortgage loans with the intention of selling these loans. Between the time that Dover entered into an interest rate lock or a commitment to originate a residential mortgage loan with a potential borrower and the time the closed loan is sold, FNB was subject to variability in market prices related to these commitments. FNB believed that it was prudent to limit the variability of expected proceeds from the future sales of these loans by entering into forward sales commitments and commitments to deliver loans into a mortgage-backed security. The commitments to originate residential mortgage loans and the forward sales commitments were freestanding derivative instruments. They did not qualify for hedge accounting treatment so their fair value adjustments were recorded through the income statement in income from mortgage loan sales.

9. Fair Values of Assets and Liabilities

FNB utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale, derivative assets and liabilities, certain FHLB advances hedged by interest rate swaps designated as fair value hedges, performing mortgage loans held for sale, and mortgage servicing rights are recorded at fair value on a recurring basis. Additionally, from time-to-time, FNB may be required to record at fair value other assets and liabilities on a nonrecurring basis, such as non-performing loans held for sale, loans held for investment, impaired loans and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets or liabilities.

Fair Value Hierarchy

FNB groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar

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instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Investments Securities Available-for-Sale

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 may include asset-backed securities in less liquid markets.

Liquidity is a significant factor in the determination of the fair values of available-for-sale debt securities. Market price quotes may not be readily available for some positions, or positions within a market sector where trading activity has slowed significantly or ceased. Some of these instruments are valued using a discounted cash flow model, which estimates the fair value of the securities using internal credit risk, interest rate and prepayment risk models that incorporate management's best estimate of current key assumptions such as default rates, loss severity and prepayment rates. Principal and interest cash flows are discounted using an observable discount rate for similar instruments with adjustments that management believes a market participant would consider in determining fair value for the specific security. Underlying assets are valued using external pricing services, where available, or matrix pricing based on the vintages and ratings. Situations of illiquidity generally are triggered by the market's perception of credit uncertainty regarding a single company or a specific market sector. In these instances, fair value is determined based on limited available market information and other factors, principally from reviewing the issuer's financial statements and changes in credit ratings made by one or more ratings agencies.

Loans Held for Sale

At December 31, 2011, loans held for sale included problem commercial loans under contract to be sold. Problem commercial loans are reclassified from loans held for investment to held for sale when they are under contract to be sold, and are carried at the lower of cost or fair value, based on contractual agreements with independent third-party buyers, less estimated costs to sell. At December 31, 2011, FNB classified loans held for sale as nonrecurring Level 2.

Loans Held for Investment

FNB does not record loans held for investment at fair value on a recurring basis. However, from time to time, a loan is considered impaired and the related impairment is charged against the allowance or a specific allowance is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as impaired, management determines the fair value of the loan to quantify impairment, should such exist. The fair value of impaired loans is estimated using one of several methods, including collateral net liquidation value, market value of similar debt, enterprise value, and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of the expected repayments or collateral meet or exceed the recorded investments in such loans. At September 30, 2012 and December 31, 2011, substantially all of the total impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. FNB records impaired loans as nonrecurring Level 3.

Other Real Estate Owned

OREO is adjusted to fair value upon transfer of the loans to OREO. Subsequently, OREO is carried at the lower of carrying value or fair value less estimated costs to sell. Fair value is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral. Given the lack of observable market prices for identical properties, FNB records the OREO as nonrecurring Level 3.

Derivative Assets and Liabilities

Substantially all derivative instruments held or issued by FNB for risk management or customer-initiated activities are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, FNB measures fair value using models that use primarily market observable inputs, such as yield curves and option volatilities, and include the value associated with counterparty credit risk. FNB classifies derivative instruments held or issued for risk management or customer-initiated activities as Level 2.

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Mortgage Servicing Rights

The fair value of mortgage serving rights (MSR) is dependent upon a number of assumptions including the fee per loan, the cost to service, the expected loan prepayment rate, and the discount rate.  In determining the fair value of the existing MSR management reviews the key assumptions, analyzes pricing in the market for comparable MSR, and uses a third party provider to independently calculate the fair value of its MSR. FNB records mortgage servicing rights as recurring Level 3.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Assets and liabilities carried at fair value on a recurring basis at September 30, 2012 for continuing operations, including financial instruments that FNB accounts for under the fair value option, are summarized in the following table:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale debt securities:
U.S. Treasury and government agencies	$	6,922	—		$	6,922	—
U.S. government sponsored agencies	22,185		—		22,185		—
States and political subdivisions	6,062		—		6,062		—
Residential mortgage-backed securities-GSE	367,767		—		367,767		—
Residential mortgage-backed securities-Private	23,722		—		23,722		—
Commercial mortgage-backed securities-GSE	23,248				23,248
Commercial mortgage-backed securities-Private	5,360		—		5,360		—
Corporate notes	37,120		—		37,120		—
Total available-for-sale debt securities	492,386		—		492,386		—
Mortgage servicing rights	248		—		—		248
Total assets at fair value from continuing operations	$	492,634	$	—	$	492,386	$	248

Assets and liabilities carried at fair value on a recurring basis at December 31, 2011 for continuing operations, including financial instruments that FNB accounts for under the fair value option, are summarized in the following table:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale debt securities:
U.S. Treasury and government agencies	$	7,188	$	—	$	7,188	$	—
U.S. government sponsored agencies	32,364		—		32,364		—
States and political subdivisions	6,090		—		6,090		—
Residential mortgage-backed securities-GSE	350,273		—		350,273		—
Residential mortgage-backed securities-Private	32,217		—		32,217		—
Corporate notes	3,174		—		3,174		—
Total available-for-sale debt securities	431,306		—		431,306		—
Total assets at fair value from continuing operations	$	431,306	$	—	$	431,306	$	—

The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods indicated:

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	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Three Months Ended September 30,
	2012		2011
Beginning balance at July 1,	$	25	$	—
Total gains or losses (realized/unrealized):
Included in earnings, net of amortization	223		—
Ending balance at September 30,	$	248	$	—

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Nine Months Ended September 30,
	2012		2011
Beginning balance at January 1,	$	—	$	2,359
Total gains or losses (realized/unrealized):
Included in earnings, net of amortization	248		(117		)
Servicing rights sold	—		(2,242		)
Ending balance at September 30,	$	248	$	—

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

FNB may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. This is due to further deterioration in the value of the assets.

Assets measured at fair value on a nonrecurring basis are included in the following table at September 30, 2012 for continuing operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	10,247	—		—		$	10,247
Other real estate owned	56,431		—		—		56,431
Total assets at fair value from continuing operations	$	66,678	$	—	$	—	$	66,678

Subsequent to their initial recognition at fair value during the quarter ended December 31, 2011, purchased impaired loans and purchased contractual loans are no longer recorded at their fair value and therefore these loans are not included in the above table of assets measured at fair value on a nonrecurring basis at September 30, 2012.

Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2011 for continuing operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Loans held for sale	$	4,529	$	—	$	4,529	$	—
Impaired loans, net	31,266		—		—		31,266
Purchased impaired loans	308,594		—		—		308,594
Purchased contractual loans	65,283		—		—		65,283
Other real estate owned	84,794		—		—		84,794
Total assets at fair value from continuing operations	$	494,466	$	—	$	4,529	$	489,937

There are no assets measured at fair value on a nonrecurring basis at September 30, 2012 for discontinued operations.

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Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2011 for discontinued operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Loans held for sale	$	233	$	—	$	233	$	—
Total assets at fair value from discontinued operations	$	233	$	—	$	233	$	—

Quantitative Information about Level 3 Fair Value Measurements

(dollars in thousands)	Fair Value at September 30, 2012		Valuation Techniques	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans, net	$	10,247	Discounted appraisals	Collateral discounts	6.00% - 40.00%
Other real estate owned	56,431		Discounted appraisals	Collateral discounts	6.00% - 40.00%
Mortgage servicing rights	248		Discounted cash flows	Prepayment rate	10.00% - 30.00%
Mortgage servicing rights				Discount rate	6.00% - 12.00%

Level 3 Valuation Methodologies. Following is a description of the unobservable inputs used for Level 3 fair value measurements.

Disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value is required. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time FNB's entire holdings of a particular financial instrument.

Because no market exists for a portion of FNB's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value for each class of FNB's financial instruments.

Cash and cash equivalents. Fair value equals the carrying value of such assets due to their nature and is classified as Level 1.

Investment securities. The fair value of investment securities is based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The fair value of equity investments in the restricted stock of the FRBR and FHLB approximates the carrying value. The fair value of investment securities is classified as Level 2.

Loans held for sale Substantially all residential mortgage loans held for sale are pre-sold and their carrying value approximates fair value. FNB classified the fair value of loans held for sale as Level 2.

Loans held for investment. The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Substantially all residential mortgage loans held for sale are pre-sold and their carrying value approximates fair value. The fair value of variable rate loans with frequent repricing and negligible credit risk approximates book value. The fair value of loans is further discounted by credit and liquidity factors. FNB classified the fair value of loans as Level 3.

Accrued interest receivable and payable. The carrying amounts of accrued interest payable and receivable approximate fair value and are classified as Level 2.

Deposits. The fair value of noninterest-bearing and interest-bearing demand deposits and savings are the amounts payable on demand because these products have no stated maturity. The fair value of time deposits is estimated using the rates currently offered for deposits of similar remaining maturities and are classified as Level 2.

Borrowed funds. The carrying value of retail repurchase agreements and federal funds purchased is considered to be a reasonable estimate of fair value. The fair value of FHLB advances and other borrowed funds is estimated using the rates currently offered for advances of similar remaining maturities and are classified as Level 2.

Junior subordinated debentures. Included in junior subordinated debentures are variable rate trust preferred securities issued by FNB. Fair values for the trust preferred securities were estimated by developing cash flow estimates for each of these debt

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instruments based on scheduled principal and interest payments and current interest rates. Once the cash flows were determined, a rate for comparable subordinated debt was used to discount the cash flows to the present value. The estimated fair value for FNB's junior subordinated debentures have declined due to wider credit spreads (i.e., spread to LIBOR) on similar trust preferred issues. This is due, in part, to proposed bank regulatory changes in bank capital structure. FNB classified the fair value of junior subordinated debentures as Level 3.

Financial instruments with off-balance sheet risk. The fair value of financial instruments with off-balance sheet risk is considered to approximate carrying value, since the large majority of these future financing commitments would result in loans that have variable rates and/or relatively short terms to maturity. For other commitments, generally of a short-term nature, the carrying value is considered to be a reasonable estimate of fair value.

The estimated fair values of financial instruments for continuing operations are as follows at the periods indicated:

	At September 30, 2012
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets of Continuing Operations:
Cash and cash equivalents	$	327,870	$	327,870	$	327,870	$	—	—
Investment securities: Available-for-sale	492,386		492,386		—		492,386		—
Loans held for sale	8,212		8,212		—		8,212		—
Loans, net	1,200,936		1,192,784		—		—		1,192,784
Accrued interest receivable	7,424		7,424		—		7,424		—
Financial Liabilities of Continuing Operations:
Deposits	1,982,253		1,987,807		—		1,987,807		—
Retail repurchase agreements	9,433		9,433		—		9,433		—
Federal Home Loan Bank advances	58,339		63,649		—		63,649		—
Junior subordinated debentures	56,702		37,068		—		—		37,068
Accrued interest payable	1,969		1,969		—		1,969		—

	At December 31, 2011
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets of Continuing Operations:
Cash and cash equivalents	$	553,416	$	553,416	$	553,416	$	—	$	—
Investment securities: Available-for-sale	431,306		431,306		—		431,306		—
Loans held for sale	4,529		4,529		—		4,529		—
Loans, net	1,178,175		1,176,795		—		—		1,176,795
Accrued interest receivable	5,919		5,919		—		5,919		—
Financial Liabilities of Continuing Operations:
Deposits	2,129,111		2,139,093		—		2,139,093		—
Retail repurchase agreements	8,838		8,838		—		8,838		—
Federal Home Loan Bank advances	58,370		62,555		—		62,555		—
Junior subordinated debentures	56,702		36,218		—		—		36,218
Accrued interest payable	1,654		1,654		—		1,654		—

The estimated fair values of financial instruments for discontinued operations are as follows:

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	As of September 30, 2012				As of December 31, 2011
(dollars in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets of Discontinued Operations	$	—	$	—	$	233	$	233
Financial Liabilities of Discontinued Operations	—		—		—		—

There were no transfers between valuation levels for any assets during the quarter ended September 30, 2012 or the quarter ended September 30, 2011. If different valuation techniques are deemed necessary, we would consider those transfers to occur at the end of the period when the assets are valued.

10. Capital Raise

Between May 21, 2012 and June 26, 2012, FNB issued 485,788 shares of common stock at an average price of $15.01 for total proceeds of $7.29 million through its “At The Market” (“ATM”) offering. Net proceeds from the offering of $6.7 million were contributed to CommunityOne. During July 2012, FNB sold a further 176 shares to holders of warrants issued in connection with the Merger, yielding net proceeds of approximately $3,000.

11. Termination of Retirement Plans

FNB elected to terminate the remaining supplemental executive retirement plans (SERP), that were frozen in prior years, by settling the remaining payments via lump sum payments that will be paid in October 2013.  The gain on termination recognized of $0.4 million is recorded in other comprehensive income. As the cash payments are made the gain will be recognized in current earnings.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following presents management's discussion and analysis of the financial condition and results of operations of FNB. Certain reclassifications have been made to prior periods to place them on a basis comparable with the current period presentation. This discussion should be read in conjunction with the financial statements and related notes included elsewhere in this quarterly Report on Form 10-Q. Results of operations for the periods included in this review are not necessarily indicative of results to be obtained during any future period.

Important Note Regarding Forward-Looking Statements

This quarterly Report on Form 10-Q contains statements that FNB believes are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements generally relate to FNB's financial condition, results of operations, plans, objectives, future performance or business. They usually can be identified by the use of forward-looking terminology, such as “believes,” “expects,” or “are expected to,” “plans,” “projects,” “goals,” “estimates,” “may,” “should,” “could,” “would,” “intends to,” “outlook” or “anticipates,” or variations of these and similar words, or by discussions of strategies that involve risks and uncertainties. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to, those described in this quarterly Report on Form 10-Q. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information actually known to us at the time. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements contained in this quarterly Report on Form 10-Q are based on current expectations, estimates and projections about FNB's business, management's beliefs and assumptions made by management. These statements are not guarantees of FNB's future performance and involve certain risks, uncertainties and assumptions (called Future Factors), which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements. Future factors include, without limitation:

• changes in interest rates, spreads on earning assets and interest-bearing liabilities, the shape of the yield curve and interest rate sensitivity

• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;

• continued and increased credit losses and material changes in the quality of our loan portfolio;

• decline in the value of our OREO;

• financial resources in the amount, at the times and on the terms required to support our future business;

• increased competitive pressures in the banking industry or in FNB's markets;

• less favorable general economic conditions, either nationally or regionally, resulting in, among other things, a reduced demand for credit or other services;

• deterioration in the housing markets and reduced demand for mortgages;

• the outcome of legislation and regulation affecting the financial services industry, including FNB, including the effects underway through the continuing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including proposed revisions to the regulatory capital requirements;

• changes in accounting principles and standards;

• adverse changes in financial performance or condition of FNB's borrowers, which could affect repayment of such borrowers' outstanding loans;

• increases in operating costs and expenses;

• changes in pricing and product/service offerings by competitors;

• rapid technological development and changes;

• the effect of any mergers, acquisitions or other transactions to which we or our subsidiaries may from time to time be a party;

• failure of assumptions underlying the establishment of our ALL; and

• success at managing the risks involved in the foregoing,

All forward-looking statements speak only as of the date on which such statements are made, and FNB undertakes no obligation to update any statement, to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

Important Factors Impacting Comparability of Results

We have accounted for our purchase of Granite Corp. using the acquisition method of accounting as of October 21, 2011, the acquisition date. The results of our operations for the three and nine months ended September 30, 2012 include the results of Granite Corp. The results of operations for the three and nine months ended September 30, 2011 do not include the results of Granite Corp. Our balance sheets as of September 30, 2012 and December 31, 2011 include the assets, liabilities and equity of Granite Corp., while various footnotes and tables presented as of September 30, 2011 do not include the assets, liabilities and equity of Granite Corp.

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Financial highlights are presented in the accompanying table.

Selected Financial Data

(dollars in thousands, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Income Statement Data
Net interest income	$	15,202		$	7,739		$	46,431		$	26,139
Provision for loan losses	32			7,181			10,877			60,944
Noninterest income	4,643			10,080			15,001			16,946
Noninterest expense	24,602			23,200			84,365			82,278
Loss from continuing operations, before income taxes	(4,789		)	(12,562		)	(33,810		)	(100,137		)
Loss from continuing operations, net of tax	(4,712		)	(13,890		)	(33,682		)	(100,889		)
Loss from discontinued operations, net of tax	—			(40		)	(27		)	(5,722		)
Net loss	(4,712		)	(13,930		)	(33,709		)	(106,611		)
Dividends on preferred stock	—			(1,093		)	—			(3,197		)
Net loss to common shareholders	(4,712		)	(15,023		)	(33,709		)	(109,808		)
Period End Balances
Assets	$	2,238,065		$	1,643,894		$	2,238,065		$	1,643,894
Loans held for sale (1)	8,212			25,661			8,212			25,661
Loans held for investment (2)	1,231,795			890,888			1,231,795			890,888
Allowance for loan losses (1)	30,859			44,121			30,859			44,121
Goodwill	4,205			—			4,205			—
Deposits	1,982,253			1,565,636			1,982,253			1,565,636
Borrowings	124,474			184,957			124,474			184,957
Shareholders' equity/(deficit)	106,873			(129,932		)	106,873			(129,932		)
Average Balances
Assets	$	2,247,437		$	1,676,606		$	2,322,484		$	1,784,934
Loans held for sale (1)	4,769			10,966			4,669			3,753
Loans held for investment (2)	1,257,460			981,130			1,253,252			1,128,546
Allowance for loan losses (1)	38,098			62,601			38,898			73,765
Goodwill	4,205			—			4,105			—
Deposits	1,989,669			1,579,545			2,054,628			1,634,589
Borrowings	125,621			200,672			124,221			209,809
Shareholders' equity/(deficit)	107,628			(120,346		)	117,953			(76,345		)
Per Common Share Data
Net loss per common share from continuing operations - basic and diluted	$	(0.22	)	$	(131.06	)	$	(1.58	)	$	(910.82	)
Net loss per common share from discontinued operations - basic and diluted	—			(0.35		)	—			(50.07		)
Net loss per common share - basic and diluted	(0.22		)	(131.41		)	(1.58		)	(960.89		)
Book value (3)	4.95			(1,714.03		)	4.95			(1,714.03		)
Tangible book value (3)	4.43			(1,745.34		)	4.43			(1,745.34		)
Performance Ratios
Return on average assets	(0.84		)%	(3.30		)%	(1.94		)%	(7.99		)%
Return on average tangible assets (3)	(0.84		)	(3.30		)	(1.95		)	(8.00		)

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Return on average equity (4)	(17.51	)	NM		(38.10	)	NM
Return on average tangible equity (3)	(19.61	)	NM		(42.32	)	NM
Net interest margin (tax equivalent)	2.95		2.04		2.94		2.17
Asset Quality Ratios
Allowance for loan losses to period end loans held for investment (1)	2.51	%	4.95	%	2.51	%	4.95	%
Nonperforming loans to period end allowance for loan losses (1)	277.48		329.43		277.48		329.43
Net charge-offs (annualized) to average loans held for investment	2.46		9.07		2.06		13.09
Nonperforming assets to period end loans held for investment and foreclosed property (5)	12.58		24.48		12.58		24.48
Capital and Liquidity Ratios
Average equity to average assets	4.79	%	(7.18	)%	5.08	%	(4.28	)%
Leverage capital	5.69		(8.54	)	5.69		(8.54	)
Tier 1 risk-based capital	9.47		(13.48	)	9.47		(13.48	)
Total risk-based capital	12.21		(13.48	)	12.21		(13.48	)
Average loans to average deposits	63.44		62.11		61.22		69.04
Average loans to average deposits and borrowings	59.67		55.11		57.73		61.19

NM - Not Meaningful

(1) Excludes discontinued operations.

(2) Loans held for investment, net of unearned income, before allowance for loan losses.

(3) Refer to the "Non-GAAP Measures" section in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

(4) Net loss to common shareholders, which excludes preferred stock dividends, divided by average realized common equity which excludes accumulated other comprehensive loss.

(5) Nonperforming loans and nonperforming assets include loans past due 90 days or more that are still accruing interest.

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Overview

FNB United Corp. or FNB, we or us (which also refers to FNB and our subsidiaries on a consolidated basis), was incorporated in 1984 under the laws of the State of North Carolina. We are a bank holding company with two bank subsidiaries: CommunityOne Bank, N.A. (“CommunityOne”), a national banking association headquartered in Asheboro, North Carolina and, through Bank of Granite Corporation (“Granite Corp.”), Bank of Granite (“Granite”), a state chartered bank headquartered in Granite Falls, North Carolina.

Through our bank subsidiaries, we offer a complete line of consumer, wealth management, mortgage and business banking services, including loan, deposit, cash management, investment management and trust services, to individual and business customers through operations located throughout central, southern and western North Carolina, including the counties of Alamance, Alexander, Ashe, Burke, Caldwell, Catawba, Chatham, Gaston, Guilford, Iredell, Mecklenburg, Montgomery, Moore, Orange, Randolph, Richmond, Rowan, Scotland, Watauga and Wilkes. Management believes that the banks have a relatively stable deposit base and no material amount of deposits is obtained from a single depositor or group of depositors, including federal, state and local governments.

CommunityOne owns two subsidiaries: Dover Mortgage Company (“Dover”) and First National Investor Services, Inc. Dover previously engaged in the business of originating, underwriting and closing mortgage loans for sale in the secondary market. Dover ceased operations in the first quarter of 2011 and filed for Chapter 11 bankruptcy on February 15, 2012. First National Investor Services, Inc. holds deeds of trust for CommunityOne. Through Granite Corp., we also own Granite Mortgage, Inc., which ceased mortgage operations in 2009 and filed for Chapter 11 bankruptcy on February 15, 2012. FNB also owns FNB United Statutory Trust I, FNB United Statutory Trust II, and Catawba Valley Capital Trust II, which were formed to facilitate the issuance of trust preferred securities.

We earn revenue primarily from interest on loans and securities investments, mortgage banking income and fees charged for financial services provided to our customers. Offsetting these revenues are the cost of deposits and other funding sources, provision for loan losses and write-downs in the value, gains and losses on disposition and holding costs associated with our OREO, and other operating costs such as: salaries and employee benefits, occupancy, data processing expenses, merger related expenses and tax expense.

On October 21, 2011, as part of the recapitalization of FNB, FNB acquired Granite Corp., through the merger of a wholly owned subsidiary of FNB merging into Granite Corp (the "Merger"). The Merger was part of FNB's recapitalization strategy.

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Results of Operations

Net Interest Income

Our principal source of revenue is net interest income. Net interest income is the difference between interest income earned on interest-earning assets, primarily loans and investment securities, and interest expense paid on interest-bearing deposits and other interest-bearing liabilities. This measure represents the largest component of income for FNB. The net interest margin measures how effectively we manage the difference between the interest income earned on interest-earning assets and the interest expense paid for funds to support those assets. Changes in interest rates earned on interest-earning assets and interest rates paid on interest-bearing liabilities, the rate of growth of the interest-earning assets and interest-bearing liabilities base, the ratio of interest-earning assets to interest-bearing liabilities, and the management of interest rate sensitivity factor into fluctuations within net interest income. An analysis is presented in the Average Balances and Net Interest Income Analysis for the three and nine month periods ended September 30, 2012 and 2011.

Net interest income on a taxable equivalent basis was $15.3 million for the three month period ended September 30, 2012 compared to $7.8 million for the same period in 2011, primarily related to the addition of Granite net interest income of $6.3 million for the third quarter of 2012.

Net interest margin (taxable equivalent) improved 91 basis points from 2.04% in the third quarter of 2011 to 2.95% in the third quarter of 2012. The increase was attributable to the impact of the Merger, management strategies to shift the mix of deposits to lower rate demand, savings and money market deposits, and the reduction of nonperforming loans compared to the third quarter of 2011. The yield on average earning assets increased by 23 basis points during the third quarter of 2012 to 3.73% from 3.50% in the third quarter of 2011. The cost of interest-bearing liabilities declined during the third quarter of 2012 by 51 basis points to 0.86% compared to 1.37% in the third quarter of 2011, primarily as a result of the deposit mix shift, declines in interest rates on all deposit products, and the impact of the accretion of fair value marks at Granite. Importantly, the cost of interest-bearing deposits declined 54 basis points, or 42%,from 1.30% for the third quarter of 2011 to 0.76% for the third quarter of 2012. The cost of all deposits, including noninterest-bearing deposits, fell to 0.66% for the third quarter of 2012, a decline of 52 basis points from 1.18% for the third quarter of 2011.

Net interest income on a taxable equivalent basis was $46.6 million for the nine month period ended September 30, 2012 compared to $26.8 million for the same period in 2011 primarily related to the addition of Granite net interest income of $21.6 million for the first nine months of 2012.

Net interest margin (taxable equivalent) improved 77 basis points from 2.17% in the first nine months of 2011 to 2.94% in the first nine months of 2012. The increase was attributable to the impact of the Merger, the impact of management strategies to shift the mix of deposits to lower rate demand, savings and money market deposits and the Granite acquisition, declines in interest rates on all deposit products, and the reduction of nonperforming loans compared to the first nine months of 2011. The yield on average earning assets increased by 17 basis points during the first nine months of 2012 to 3.78% from 3.61% in the first nine months of 2011. The cost of interest-bearing liabilities declined during the first nine months of 2012 by 50 basis points to 0.91% compared to 1.41% in the first nine months of 2011, primarily as a result of the deposit mix shift, declines in interest rates on all deposit products, and the impact of the accretion of fair value marks at Granite. The cost of interest-bearing deposits declined 51 basis points from 1.34% for the first nine months 2011 to 0.83% for the first nine months of 2012. The cost of all deposits, including noninterest-bearing deposits, fell to 0.73% for the first nine months of 2012, a decline of 48 basis points from 1.21% for the first nine months of 2011.

The following tables summarize the average balance sheets and net interest income/margin analysis for the three and nine months ended September 30, 2012 and 2011. FNB's interest yield earned on interest-earning assets and interest rate paid on interest-bearing liabilities shown in the table are derived by dividing interest income and expense by the average balances of interest-earning assets or interest-bearing liabilities, respectively.

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Average Balances and Net Interest Income Analysis - Third Quarter

	Three Months Ended September 30,
	2012						2011
					Average							Average
(dollars in thousands)	Average		Income /		Yield /		Average			Income /		Yield /
	Balance (3)		Expense		Rate		Balance (3)			Expense		Rate
Interest-earning assets:
Loans (1)(2)	$	1,262,229	$	16,312	5.14	%	$	992,096		$	11,023	4.41	%
Taxable investment securities	475,032		2,667		2.23		310,269			2,166		2.77
Tax-exempt investment securities (1)	—		—		—		2,595			75		11.47
Other earning assets	317,932		276		0.35		216,400			173		0.32
Assets of discontinued operations	—		—		—		292			—		—
Total earning assets	2,055,193		19,255		3.73		1,521,652			13,437		3.50
Noninterest-earning assets:
Cash and due from banks	31,202						22,405
Goodwill and core deposit premium	11,502						3,707
Other assets, net	149,540						128,804
Assets of discontinued operations	—						38
Total assets	$	2,247,437					$	1,676,606
Interest-bearing liabilities:
Interest-bearing demand deposits	$	346,289	$	335	0.38	%	$	221,859		$	405	0.72	%
Savings deposits	73,274		28		0.15		45,919			29		0.25
Money market deposits	445,192		436		0.39		283,007			481		0.67
Time deposits	867,963		2,521		1.16		875,760			3,768		1.71
Total interest-bearing deposits	1,732,718		3,320		0.76		1,426,545			4,683		1.30
Retail repurchase agreements	10,574		6		0.23		8,456			11		0.52
Federal Home Loan Bank advances	58,345		391		2.67		133,014			609		1.82
Other borrowed funds	56,702		288		2.02		59,202			313		2.10
Total interest-bearing liabilities	1,858,339		4,005		0.86		1,627,217			5,616		1.37
Noninterest-bearing liabilities and shareholders' equity:
Noninterest-bearing demand deposits	256,951						153,000
Other liabilities	24,519						15,627
Shareholders' equity/(deficit)	107,628						(120,346		)
Liabilities of discontinued operations	—						1,108
Total liabilities and shareholders' equity	$	2,247,437					$	1,676,606
Net interest income and net yield on earning assets (4)			$	15,250	2.95	%				$	7,821	2.04	%
Interest rate spread (5)					2.87	%						2.13	%

(1) The fully tax equivalent basis is computed using a federal tax rate of 35%.

(2) Average loan balances include nonaccruing loans and loans held for sale.

(3) Average balances include market adjustments to fair value for securities and loans held for sale.

(4) Net yield on earning assets is computed by dividing net interest income by average earning assets.

(5) Earning asset yield minus interest bearing liabilities rate.

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Average Balances and Net Interest Income Analysis - Nine Months

	Nine Months Ended September 30,
	2012						2011
					Average							Average
(dollars in thousands)	Average		Income /		Yield /		Average			Income /		Yield /
	Balance (3)		Expense		Rate		Balance (3)			Expense		Rate
Interest-earning assets:
Loans (1)(2)	$	1,257,921	$	50,601	5.37	%	$	1,132,299		$	36,415	4.30	%
Taxable investment securities	456,836		8,238		2.41		333,572			6,963		2.79
Tax-exempt investment securities (1)	—		—		—		6,885			532		10.33
Other earning assets	398,463		937		0.31		170,489			456		0.36
Assets of discontinued operations	—		—		—		9,491			307		4.32
Total earning assets	2,113,220		59,776		3.78		1,652,736			44,673		3.61
Noninterest-earning assets:
Cash and due from banks	31,668						23,737
Goodwill and core deposit premium	11,754						3,904
Other assets, net	165,731						104,395
Assets of discontinued operations	111						162
Total assets	$	2,322,484					$	1,784,934
Interest-bearing liabilities:
Interest-bearing demand deposits	$	348,145	$	1,099	0.42	%	$	225,744		$	1,322	0.78	%
Savings deposits	72,187		81		0.15		45,477			86		0.25
Money market deposits	439,296		1,418		0.43		290,000			1,626		0.75
Time deposits	943,897		8,646		1.22		918,235			11,780		1.72
Total interest-bearing deposits	1,803,525		11,244		0.83		1,479,456			14,814		1.34
Retail repurchase agreements	9,163		23		0.34		9,053			43		0.64
Federal Home Loan Bank advances	58,356		1,057		2.42		140,492			2,010		1.91
Other borrowed funds	56,702		877		2.07		60,264			1,009		2.24
Total interest-bearing liabilities	1,927,746		13,201		0.91		1,689,265			17,876		1.41
Noninterest-bearing liabilities and shareholders' equity:
Noninterest-bearing demand deposits	251,103						155,133
Other liabilities	25,682						15,655
Shareholders' equity/(deficit)	117,953						(76,345		)
Liabilities of discontinued operations							1,226
Total liabilities and shareholders' equity	$	2,322,484					$	1,784,934
Net interest income and net yield on earning assets (4)			$	46,575	2.94	%				$	26,797	2.17	%
Interest rate spread (5)					2.87	%						2.20	%

(1) The fully tax equivalent basis is computed using a federal tax rate of 35%.

(2) Average loan balances include nonaccruing loans and loans held for sale.

(3) Average balances include market adjustments to fair value for securities and loans held for sale.

(4) Net yield on earning assets is computed by dividing net interest income by average earning assets.

(5) Earning asset yield minus interest bearing liabilities rate.

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Provision for Loan Losses

The provision for loan loss provides a level of allowance considered appropriate to absorb management's estimate of losses inherent in the loan portfolio. The amount of this charge is affected by several considerations, including management's evaluation of various risk factors in determining the adequacy of the allowance (see additional discussion under “Asset Quality”), actual loan loss experience and changes in the loan portfolio.

During the three month period ended September 30, 2012, the provision for loan losses, excluding discontinued operations, was $32 thousand, compared to $7.2 million in the same period of 2011, as a result of reductions in nonperforming loans and reductions in the levels of commercial real estate loans within the loan portfolio. FNB has experienced lower net charge-offs and improved classified asset and past due levels compared to 2011. During the second quarter of 2012 management established a $3.3 million allowance related to purchased impaired loans acquired in the Merger. During the nine month period ended September 30, 2012, the provision for loan losses, excluding discontinued operations, was $10.9 million, compared to $60.9 million, in the same period of 2011, also due to reductions in nonperforming loans. Net charge-offs for the nine months ended September 30, 2012 totaled $19.4 million, or 2.06% of annualized average loans, reduced from $110.5 million, or 13.09% of annualized average loans for the same period in 2011, also as a result of reductions in nonperforming loans and reductions in the levels of commercial real estate loans in the loan portfolio.

Noninterest Income

Noninterest income includes mortgage banking income, fees and service charges on deposit accounts, fees from cardholder and merchant services, fees and commissions related to trust and investment services, gains and losses on the sales of securities, and all other types of noninterest revenue.

For the three months ended September 30, 2012, noninterest income, excluding discontinued operations, was $4.6 million compared to $10.1 million for the same period in 2011. The decline was the result of a decrease from $7.4 million of gains on sales of investment securities in 2011 to a $33 thousand loss in 2012, partially offset by the addition of Granite service charges, gains in service charge income as a result of the Merger and an increase in mortgage loan income as FNB began selling loans to Fannie Mae in 2012. For the nine months ended September 30, 2012, noninterest income, excluding discontinued operations, was $15.0 million compared to $16.9 million for the same period in 2011. The decrease was the result of a decrease in securities gains from $7.3 million in 2011 to $1.9 million in 2012, as well as increases in service charges on deposits and mortgage loan income described above.

Noninterest Expense

Noninterest expense includes salary and employee benefits, occupancy and equipment, expenses associated with other real estate owned, including write-downs, and one-time expenses related to the acquisition and integration of Granite.

Noninterest expenses were $24.6 million in the third quarter of 2012 compared to $23.2 million in the same period of 2011, an increase of $1.4 million, or 6%. The increase in noninterest expense was primarily attributable to the addition of $6.6 million in Granite noninterest expenses, mostly offset by decreases in OREO expense, Merger and recapitalization related expenses and FDIC insurance costs. For the nine months ended September 30, 2012, noninterest expenses were $84.4 million compared to $82.3 million in the same period of 2011. Results for 2012 include $20.9 million of noninterest expenses for Granite. That increase is offset by a $12.4 million decrease in OREO expense at CommunityOne, as well as a $3.0 million decrease in FDIC insurance costs at CommunityOne as a result of new FDIC assessment rates based on the improved capital position of CommunityOne, among other factors.

Full-time equivalent employees averaged 637 employees for the third quarter 2012 versus 462 employees for the third quarter of 2011. The increase is primarily related to the Merger, as well as increases in staff in credit and problem asset resolution areas.

Provision for Income Taxes

Excluding discontinued operations, FNB had an income tax benefit totaling $(77) thousand for the third quarter of 2012 and an income tax benefit of $(128) thousand for the first nine months of 2012. FNB recorded income tax expenses of $1.3 million and $0.8 million for the three and nine months ended September 30, 2011, respectively. FNB's provision for income taxes, as a percentage of loss before income taxes, excluding discontinued operations, was 1.61% and 0.38% for the three and nine months ended September 30, 2012, respectively, compared to 10.57% and 0.75% for the three and nine months ended September 30, 2011, respectively.

Balance Sheet Review

Total assets at September 30, 2012 were $2,238.1 million, a decrease of $171.0 million, or 7.1%, compared to total assets of $2,409.1 million at December 31, 2011.

Cash and interest-bearing balances were $327.9 million at September 30, 2012, a decrease of $225.5 million, or 40.8%, compared to $553.4 million at December 31, 2011, primarily attributable to the purchases of $173.2 million of residential mortgage loans, the reduction in deposits of $146.9 million, and the purchase of $42.6 million of securities (net of sales and repayments), offset by loan repayments and OREO sales.

44

Investment securities increased $61.1 million during the first nine months of 2012, from $431.3 million at December 31, 2011 to $492.4 million at September 30, 2012, an increase of 14.2%. The portfolio is comprised of U.S. federal agency securities and federal agency MBSs (GSE), securities of U.S. state and political subdivisions, private residential MBSs and corporate debt securities.

Gross loans held for investment increased $14.3 million, or 1.2%, during the first nine months of 2012, from $1,217.5 million at December 31, 2011 to $1,231.8 million at September 30, 2012. During the first nine months of 2012, FNB purchased $173.2 million of performing residential mortgage loans.

Other real estate owned ("OREO") decreased $29.6 million during the first nine months of 2012, from $110.4 million at December 31, 2011 to $80.8 million at September 30, 2012, as a result of $38.2 million of OREO sales and $16.1 million of writedowns and losses, partially offset by the addition of $24.8 million of OREO properties. At September 30, 2012, 58 assets with a net carrying amount of $18.2 million were under contract for sale. Estimated losses with these sales have been recognized in the Consolidated Statements of Operations in the first nine months of 2012.

Total deposits were $1,982.3 million at September 30, 2012, a decline of $146.9 million, or (6.9)% from $2,129.1 million at December 31, 2011. Management has implemented strategies to shift the mix of deposits from higher cost time deposits, including higher rate CD's and brokered CD's, towards lower rate demand, savings and money market deposits. At September 30, 2012, CD's comprised 42.2% of total deposits compared to 49.1% at December 31, 2011. Noninterest-bearing deposits increased $29.7 million, or 12.7%, from $234.7 million at December 31, 2011 to $264.4 million at September 30, 2012. Total cost of interest-bearing deposits declined by 51 basis points from 1.34% in the first nine months of 2011 to 0.83% in the first nine months of 2012. The cost of all deposits, including noninterest-bearing deposits, fell to 0.73% for the first nine months of 2012, a decline of 48 basis points from 1.21% for the first nine months of 2011.

Shareholders' equity at September 30, 2012 was $106.9 million as compared to $129.0 million at December 31, 2011. The book value per share was $4.95 and average equity to average assets was 5.08% at September 30, 2012 as compared to a book value per share of $6.11 and average equity to average assets of (1.19)% at December 31, 2011. The change in shareholders' equity reflects a net loss to common shareholders for the nine months ended September 30, 2012 of $33.7 million, offset by $6.7 million in common equity raised during the first nine months of 2012, and $5.8 million other comprehensive income, net of tax. FNB did not declare common dividends during the nine months ended September 30, 2012, and will not be able to pay any dividends until such time as FNB returns to profitability and either receives or is not required to receive regulatory approval for the payment of dividends. FNB does not expect to pay dividends to shareholders for the foreseeable future.

Investment Securities

FNB evaluates all securities on a quarterly basis, and more frequently as economic conditions warrant, to determine if an other-than-temporary impairment (“OTTI”) exists. In evaluating the possible impairment of securities, consideration is given to the length of time and the extent to which the fair value has been less than book value, the financial conditions and near-term prospects of the issuer, and the ability and intent of FNB to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, FNB may consider whether the securities are issued by the federal government or its agencies or government sponsored agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition. If management determines that an investment experienced an OTTI, the loss is recognized in the income statement as a realized loss. Any recoveries related to the value of these securities are recorded as an unrealized gain (as other comprehensive income/(loss) in shareholders' equity) and not recognized in income until the security is ultimately sold. As of September 30, 2012, there were no securities considered by FNB to have OTTI.

Asset Quality

Management considers the asset quality of FNB to be of primary importance. A formal loan review function, independent of loan origination, is used to identify and monitor problem loans. As part of the loan review function, FNB engages a third-party assessment group to review the underwriting documentation and risk grading analysis. In addition to continuing to rely on third-party loan reviews, a formal internal credit review function commenced in 2011 to provide more timely responses. This function reports directly to the Risk Management Committee of the Board of Directors, and is independent of loan origination.

The allowance for loan losses of $39.4 million at December 31, 2011 decreased by 21.6% to $30.9 million at September 30, 2012, as a result of reductions in nonperforming loans and reductions in the levels of commercial real estate loans in the loan portfolio. As a percentage of gross loans held for investment, the allowance for loan losses declined from 3.23% at December 31, 2011 to 2.51% at September 30, 2012.

During the three month period ended September 30, 2012, FNB charged off $9.3 million in loans and realized $1.6 million in recoveries, for $7.7 million of net charge-offs. For the nine months ended September 30, 2012, FNB charged off $23.6 million in loans and realized $4.2 million in recoveries, for $19.4 million of net charge-offs. The majority of the loans that were charged off were loans that had been in impairment status and had specific reserves assigned to them in prior periods.

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Acquired Loans

Loans acquired in the Merger ("Granite Purchased Loans") include purchased impaired loans ("PI loans") and purchased contractual ("PC loans") revolving consumer and commercial loans. At September 30, 2012 there were $287.3 million of Granite Purchased Loans, of which $35.1 million were PC loans, $220.4 million were PI Loans with no subsequent credit deterioration and $31.8 million were PI Loans with subsequent credit deterioration.

PI loans are segregated into pools and recorded at estimated fair value on the date of acquisition without the carryover of the related ALL. PI loans are accounted for under ASC 310-30 when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition we will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the date of acquisition may include statistics such as past due status, nonaccrual status and risk grade. PI loans generally meet FNB's definition for nonaccrual status, however, even if the borrower is not currently making payments, FNB will classify loans as accruing if FNB can reasonably estimate the amount and timing of future cash flows.The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference.

Periodically, we estimate the expected cash flows for each pool of the PI loans and evaluate whether the expected cash flows for each pool have changed from prior estimates. Decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or reclassification from nonaccretable difference to accretable yield with a positive impact on future interest income. Excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

We have elected to treat the Granite portfolio under ASC 310-30, with the exception of performing revolving consumer and commercial loans, which are being accounted for under ASC 310-20.

At September 30, 2012, an ALL of $3.6 million was required for the Granite Purchased Loans, and the Granite Purchased Loans are presented on an accruing basis.

Nonperforming Assets

Nonperforming assets are comprised of nonaccrual loans, accruing loans past due 90 days or more, other repossessed assets and OREO. Nonperforming loans are loans placed in nonaccrual status when, in management's opinion, the collection of all or a portion of interest becomes doubtful. Loans are returned to accrual status when the factors indicating doubtful collectability cease to exist and the loan has performed in accordance with its terms for a demonstrated period of time. OREO represents real estate acquired through foreclosure or deed in lieu of foreclosure and is generally carried at fair value, less estimated costs to sell.

The level of nonperforming loans decreased from $106.0 million or 9.0% of loans held for investment at December 31, 2011, to $86.1 million, or 7.0% of loans held for investment at September 30, 2012. OREO and repossessed assets were $80.8 million at September 30, 2012, compared to $110.4 million at December 31, 2011, a decline of $29.6 million. During the first nine months of 2012, we recorded net write-downs and net loss on sales of OREO of $16.1 million as compared to $27.7 million during the first nine months of 2011. Depressed market conditions have adversely impacted, and may continue to adversely impact, the financial condition and liquidity position of certain borrowers. Additionally, the value of real estate collateral may come under further pressure from weak economic conditions and prevailing unemployment levels, resulting in additional delinquencies and loans being placed on nonaccrual.

The soft real estate market in 2011 and 2012 has adversely affected the financial condition and liquidity position of certain borrowers. Commercial real estate secured lending (including commercial, construction and land development) is a significant but decreasing portion of our commercial loan portfolio. These categories constitute $524.4 million, or approximately 42.6%, of our total loans held for investment portfolio, down from 51.3% at December 31, 2011. These categories are generally affected by changes in economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax and other laws and acts of nature. The downturn in the real estate markets in which we originate, purchase, and service mortgage and other loans hurt our business because these loans are secured by real estate. Further declines will adversely affect the value of real estate collateral of loans secured by real estate, which could adversely affect our future earnings.

Allowance for Loan Losses

In determining the ALL and any resulting provision to be charged against earnings, particular emphasis is placed on the results of the loan review process. Consideration is also given to a review of individual loans, historical loan loss experience, the value and adequacy of collateral, as well as the economic conditions in our market area. For loans determined to be impaired, the allowance is based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. This evaluation is inherently subjective as it requires material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. In addition, as an integral part of its examination process, the OCC periodically reviews CommunityOne's ALL and the FDIC periodically reviews Granite's ALL. Either the OCC or FDIC may require CommunityOne or Granite, as the case may be, to recognize changes to the allowance based on

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its judgments about information available to them at the time of its examinations. Loans are charged off when, in the opinion of management, they are deemed to be uncollectible. Recognized losses are charged against the allowance, and subsequent recoveries are added to the allowance.

Estimated credit losses should meet the criteria for accrual of a loss contingency, i.e., a provision to the ALL, set forth in GAAP. Our methodology for determining the ALL is based on the requirements of GAAP, the Interagency Policy Statement on the Allowance for Loan and Lease Losses and other regulatory and accounting pronouncements. The ALL is determined by the sum of three separate components:  (i) the impaired loan component, which addresses specific reserves for impaired loans; (ii) the general reserve component, which addresses reserves for pools of homogeneous loans; and (iii) an unallocated reserve component (if any) based on management's judgment and experience. The loan pools and impaired loans are mutually exclusive; any loan that is impaired should be excluded from its homogenous pool for purposes of that pool's reserve calculation, regardless of the level of impairment. However, FNB has established a de minimis threshold for loan exposures that, if found to be impaired, will have impairment determined by applying the same general reserve rate as nonimpaired loans within the same pool.

Excluding discontinued operations, the ALL, as a percentage of loans held for investment, amounted to 2.51% at September 30, 2012 compared to 3.23% at December 31, 2011. Net charge-offs were $19.4 million in the first nine months of 2012 compared to $110.5 million in the first nine months of 2011. Annualized charge-offs in the first nine months of 2012 fell to 2.06% of average loans, from 13.09% in the same period of 2011. A substantial portion of 2012 charge-offs were related to impaired loans, and consisted of loans considered wholly impaired and loans with partial impairment. The provision for losses charged to operations in the first nine months of 2012 decreased to $10.9 million from $60.9 million in 2011.

As a result of on-going analysis of the loan portfolio, certain loans have migrated to higher, more adverse risk grades and an aggressive posture towards the timely charge-off of identified impairment has also continued. Actual past due loans and loan charge-offs have remained at manageable levels and management continues to diligently work to improve asset quality. Management believes the ALL of $30.9 million at September 30, 2012 is adequate to cover probable losses inherent in the loan portfolio; however, assessing the adequacy of the allowance is a process that requires considerable judgment. Management's judgments are based on numerous assumptions about current events that it believes to be reasonable, but which may or may not be valid. Thus, there can be no assurance that loan losses in future periods will not exceed the current allowance or that future increases in the allowance will not be required. No assurance can be given that management's ongoing evaluation of the loan portfolio in light of changing economic conditions and other relevant circumstances will not require significant future additions to the allowance, thus adversely affecting the operating results of FNB. Additional information on the ALL is presented in Note 5 to the consolidated financial statements.

As of September 30, 2012, FNB has elected to change the method it uses to calculate the the historical loss rates and qualitative and environmental factors in its ALL. FNB had previously calculated the ALL using historical loss factors based on the risk-graded pool to which the loss was assigned at quarter end four quarters prior to the loss. Historical loss rates are now calculated by associating losses to the risk-graded pool to which they relate for each of the previous eight quarters. Then, using a 24 quarter look back period, loss factors are calculated for each risk-graded pool.

In addition to FNB's ability to use its own historical loss data and migration between risk grades, it has also set up a more rigorous process for computing the qualitative factors that impact the ALL. A committee, independent of the historical loss migration team, reviews risk factors that may impact the ALL. Some factors are statistically quantifiable, such as concentration, growth, delinquency, and nonaccrual risk by loan type, while other factors are qualitative in nature, such as staff competency, competition within our markets, economic and regulatory changes impacting the loans held for investment.

The impact of the change in methodology to the third quarter earnings and to the ALL was to reduce the provision for loan losses and the ALL by an immaterial amount.

The following table presents FNB's investment in loans considered to be impaired and related information on those impaired loans as of September 30, 2012 and December 31, 2011.

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	September 30, 2012				December 31, 2011
(dollars in thousands)	Balance		Associated Reserves		Balance		Associated Reserves
Impaired loans, held for sale	$	—	$	—	$	4,529	$	—
Impaired loans, not individually reviewed for impairment	7,274		—		5,127		—
Impaired loans, individually reviewed, with no impairment	72,402		—		53,884		—
Impaired loans, individually reviewed, with impairment	14,769		4,522		42,357		11,090
Total impaired loans *	$	94,445	$	4,522	$	105,897	$	11,090
Purchased impaired loans with subsequent deterioration	31,801		3,296		—		—
Purchased impaired loans with no subsequent deterioration	220,404		—		330,836		—
Total Reserves			7,818				11,090
Average impaired loans calculated using a simple average	$	98,567			$	112,600
* Included at September 30, 2012 and December 31, 2011 were $3.6 million and $2.9 million, respectively, in restructured and performing loans.

Liquidity Management

Liquidity management refers to the ability to meet day-to-day cash flow requirements based primarily on activity in loan and deposit accounts of FNB's customers. Deposit withdrawals, loan funding and general corporate activity create a need for liquidity for FNB. Liquidity is derived from sources such as deposit growth; maturity, calls, or sales of investment securities; principal and interest payments on loans and access to borrowed funds or lines of credit.

Consistent with the general approach to liquidity, loans and other assets of FNB are funded primarily by local core deposits. To date, a stable retail deposit base and a modest amount of brokered deposits have been adequate to meet FNB's loan obligations, while maintaining the desired level of immediate liquidity. Additionally, an investment securities portfolio is available for both immediate and secondary liquidity purposes.

During the first quarter of 2012, FNB resumed deferring the payment of cash dividends on its outstanding junior subordinated debentures.

As of September 30, 2012, available borrowing under credit lines totaled $50.1 million, compared to $74.5 million at December 31, 2011. FNB could also access $79.6 million of additional borrowings under credit lines by pledging additional collateral.

At September 30, 2012, $93.4 million of the investment securities portfolio was pledged to secure public deposits, $14.5 million was pledged to retail repurchase agreements, $4.0 million was pledged to the FRBR and $2.1 million was pledged to others, leaving $378.4 million available as lendable collateral.

Asset/Liability Management and Interest Rate Sensitivity

One of the primary objectives of asset/liability management is to maximize the net interest margin while minimizing the earnings risk associated with changes in interest rates. One method used to manage interest rate sensitivity is to measure, over various time periods, the interest rate sensitivity positions, or gaps. This method, however, addresses only the magnitude of timing differences and does not address earnings or market value. Therefore, management uses an earnings simulation model to prepare, on a regular basis, earnings projections based on a range of interest rate scenarios to more accurately measure interest rate risk.

FNB's balance sheet was asset-sensitive at September 30, 2012. An asset-sensitive position means that net interest income will generally move in the same direction as interest rates. For instance, if interest rates increase, net interest income can be expected to increase, and if interest rates decrease, net interest income can be expected to decrease. FNB's asset sensitivity is primarily derived from a large cash and due from banks position, a large concentration in prime-based commercial loans that adjust as the prime interest rate changes and the long duration of its indeterminate term deposits. These prime based loans are primarily funded by deposits that are not expected to reprice as quickly as the loans. Since the prime rate is not expected to decline below current levels, management believes FNB's risk to lower interest rates is low.

Capital Adequacy and Resources

Under guidelines established by the Federal Reserve Board and each federal banking agency, the OCC and FDIC, capital adequacy is currently measured for regulatory purposes by certain risk-based capital ratios, supplemented by a leverage capital ratio. The guidelines define an institution's total qualifying capital as having two components: Tier 1 capital, which must be at least 50% of total

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qualifying capital and is mainly comprised of common equity, retained earnings and qualifying preferred stock, less certain intangibles; and Tier 2 capital, which may include the ALL up to a maximum of 1.25% of risk weighted assets, qualifying subordinated debt, qualifying preferred stock and hybrid capital instruments. The requirements also define the weights assigned to assets and off-balance sheet items to determine the risk weighted asset components of the risk-based capital rules.

Under the requirements, the minimum capital standards that must be met by any bank holding company or bank include a Tier 1 capital ratio of at least 4%, a total risk based capital ratio of at least 8% and a leverage capital ratio of at least 4% (except for those institutions with the highest regulatory ratings and not experiencing significant growth or expansion). The leverage capital ratio, which serves as a minimum capital standard, considers Tier 1 capital only and is expressed as a percentage of average total assets for the most recent quarter, after reduction of those assets for goodwill and other disallowed intangible assets at the measurement date. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution's exposure to a decline in the economic value of its capital due to changes in interest rates, and an institutions ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution's overall capital adequacy.

Under the Consent Order CommunityOne entered into with the OCC on July 22, 2010, CommunityOne is required to maintain a leverage capital ratio of 9% and a total risk based capital ratio of 12%. Under the Order that Granite entered into with the FDIC and the North Carolina Commissioner of Banks ("NCCOB") on August 17, 2009, Granite is required to maintain a leverage capital ratio of 8% and a total risk based ratio of 12%. At September 30, 2012, FNB had a total risk-based capital ratio of 12.21% and a Tier 1 risk-based capital ratio of 9.47%. CommunityOne and Granite had a total risk-based capital ratio of 11.79% and 14.73%, respectively, and a Tier 1 risk-based capital ratio of 10.52% and 13.80%, respectively. FNB had a leverage capital ratio of 5.69% at September 30, 2012, and each of CommunityOne and Granite had leverage capital ratios of 6.46% and 7.88%, respectively. As of September 30, 2012, CommunityOne was not in compliance with either the leverage capital or the total risk based capital requirements of its Order, and Granite was not in compliance with the leverage capital requirement of its Order.

The prompt corrective action provisions of federal law require the federal bank agencies to take prompt corrective action to resolve problems of insured depository institutions such as CommunityOne and Granite. The extent of these powers depends upon whether the institution is designated as well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized or critically undercapitalized, as defined by the law. The minimum capital requirements to be characterized as “well-capitalized” and “adequately capitalized,” as defined by the prompt corrective action provision of federal law, the capital requirements required under the Orders, and each of CommunityOne's and Granite's capital ratios as of September 30, 2012 were as follows:

			Minimum Regulatory Requirement
					Pursuant to Order
	CommunityOne Bank	Bank of Granite	Adequately Capitalized	Well- Capitalized	CommunityOne Bank	Bank of Granite
Leverage capital ratio	6.46%	7.88%	4.00%	5.00%	9.00%	8.00%
Tier 1 risk-based capital ratio	10.52%	13.80%	4.00%	6.00%	—	—
Total risk-based capital ratio	11.79%	14.73%	8.00%	10.00%	12.00%	12.00%

As of September 30, 2012, CommunityOne and Granite were designated under these prompt corrective action provisions as "adequately capitalized" by the OCC and FDIC, respectively, because each bank continues to be subject to an Order.

The federal banking agencies have issued notices of proposed rulemakings that would change the leverage and risk-based capital requirements (including the prompt corrective action framework). Under these proposed rulemakings, the definition of the regulatory capital components would materially change. Among the most important of these changes is that a new common equity Tier 1 risk based capital ratio would be added. In addition, net unrealized gains and losses on available for sale debt and equity securities would be included in common equity Tier 1 capital. Certain deductions from common equity would be expanded and others, including mortgage servicing assets and deferred tax assets subject to temporary timing differences, would be subject to threshold deductions. While existing limitations on tier 2 capital would be eliminated, the agencies would also require a capital conservation buffer of up to 2.5% above each of the capital ratio requirements (common equity tier 1, tier 1, and total risk-based capital) which must be met for a bank to pay dividends, engage in share buybacks or make discretionary bonus payments to executive management without restriction. The rulemakings also propose changes in the risk-weighting of certain assets, including, 1 - 4 family residential mortgage loans, “high volatility” commercial real estate, past due assets, structured securities and equity holdings. The methodology for off balance sheet items such as commitments with an original maturity of less than or equal to one year that are not unconditional cancelable and mortgage loans sold with certain credit enhancing representations and warranties, are also revised. The proposals dealing with the regulatory capital components are proposed to go into effect on January 1, 2013 and the proposals revising the risk weighting of certain assets are proposed to go into effect on January 1, 2015. These changes, if adopted as proposed, could have a material effect on FNB.

Application of Critical Accounting Policies

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FNB's accounting policies are in accordance with GAAP and with general practice within the banking industry and are fundamental to understanding management's discussion and analysis of results of operations and financial condition. Our significant accounting policies are discussed in detail in Note 1 of the consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2011, as amended ("Form 10-K"), and are described below.

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, valuation of OREO, carrying value of investment securities, business combinations and treatment of deferred tax assets.

Allowance for Loan Losses

The ALL, which is utilized to absorb actual losses in the loan portfolio, is maintained at a level consistent with management's best estimate of probable loan losses incurred as of the balance sheet date. FNB's ALL is assessed quarterly by management. This assessment includes a methodology that separates the total loan portfolio into homogeneous loan classifications for purposes of evaluating risk. The required allowance is calculated by applying a risk adjusted reserve requirement to the dollar volume of loans within a homogenous group. FNB has grouped its loans into pools according to the loan segmentation regime employed on schedule RC-C of the FFIEC's Consolidated Report of Condition and Income. Management analyzes the loan portfolio on an ongoing basis to evaluate current risk levels, and risk grades are adjusted accordingly. While management uses the best information available to make evaluations, future adjustments may be necessary, if economic or other conditions differ substantially from the assumptions used. See additional discussion under Asset Quality.

Valuation of Other Real Estate Owned

Other real estate owned represents properties acquired through foreclosure or deed in lieu thereof. The property is classified as held for sale and is carried at fair value based on recent appraisals, less estimated costs to sell. Declines in the fair value of properties included in other real estate below carrying value are recognized by a charge to income. An increase in fair value is not recognized until the property is sold.

Carrying Value of Securities

Securities designated as available-for-sale are carried at fair value. However, the unrealized difference between amortized cost and fair value of securities available-for-sale is excluded from net income unless there is an other than temporary impairment and is reported, net of deferred taxes, as a component of shareholders' equity as accumulated other comprehensive income (loss). Securities held-to-maturity are carried at amortized cost, as the banks have the ability, and management has the positive intent, to hold these securities to maturity. Premiums and discounts on securities are amortized and accreted according to the interest method.

Business Combinations

Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method the acquiring entity in a business combination recognizes 100% of the acquired assets and assumed liabilities, regardless of the percentage owned, at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceed the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies must also be recognized at fair value, if the fair value can be determined during the measurement period. Purchased impaired ("PI") loans are recorded at fair value at acquisition date. Therefore, amounts deemed uncollectible at acquisition date become part of the fair value determination and are excluded from the allowance for loan and lease losses. Following acquisition, we periodically review PI loans to determine if changes in estimated cash flows have occurred. Subsequent decreases in the amount expected to be collected result in a provision for loan losses with a corresponding increase in the allowance for loan losses. Subsequent increases in the amount expected to be collected result in a reversal of any previously recorded provision for loan losses and related allowance for loan losses, if any, or prospective adjustment to the accretable yield if no provision for loan losses had been recorded. Results of operations of an acquired business are included in the statement of earnings from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.

Treatment of Deferred Tax Assets

Management's determination of the realization of deferred tax assets is based upon its judgment of various future events and uncertainties, including the timing and amount of future income earned by certain subsidiaries and the implementation of various tax plans to maximize realization of the deferred tax assets. In evaluating the positive and negative evidence to support the realization of the asset under current guidance, there is insufficient positive evidence to support a conclusion that it is more likely than not this asset will be realized in the foreseeable future. Examinations of the income tax returns or changes in tax law may impact FNB's tax liabilities and resulting provisions for income taxes.

A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more-likely-than-not that some portion or the entire deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon

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the generation of future taxable income during the periods in which those temporary differences become deductible. In making such judgments, significant weight is given to evidence that can be objectively verified. As a result of the increased credit losses, FNB continues to be in a three-year cumulative pre-tax loss position as of September 30, 2012. A cumulative loss position is considered significant negative evidence in assessing the realizability of a deferred tax asset, which is difficult to overcome. FNB's estimate of the realization of its deferred tax assets was based on the scheduled reversal of deferred tax liabilities and taxable income available in prior carry back years and estimated unrealized losses in the available-for-sale investment portfolio. In total, FNB has a gross deferred tax asset of $180.7 million which is offset by a valuation allowance of $178.9 million. FNB did not consider future taxable income in determining the realizability of its deferred tax assets. FNB expects its income tax expense (benefit) will be negligible until profitability has been restored for a reasonable time and such profitability is considered sustainable. At that time, the valuation allowance would be reversed. Reversal of the valuation allowance requires a great deal of judgment and will be based on the circumstances that exist as of that future date. If future events differ significantly from our current forecasts, we may need to increase this valuation allowance, which could have a material adverse effect on the results of operations and financial condition.

The Merger was considered a change in control for Granite Corp. under Internal Revenue Code Section 382 and the Regulations, thereunder. Accordingly, we are required to evaluate potential limitation or deferral of its ability to carryforward pre-acquisition net operating losses and to determine the amount of net unrealized built-in losses (“NUBIL”), which may be subject to similar limitation or deferral. Under the Internal Revenue Code and Regulations, NUBIL realized within 5 years of the change in control are subject to potential limitation, which for us is October 20, 2016. Through that date, we will continue to analyze our ability to utilize such losses to offset anticipated future taxable income, however, this estimate will not be known until the five-year recognition period expires. Losses limited under these provisions are generally limited to a carryforward period of 20 years, subject to the annual limitation and expire if not used by the end of that period. As of September 30, 2012, total deferred tax assets attributable to Granite Corp. and subsidiaries were approximately $35.8 million which is offset by a valuation allowance of $34.4 million. We anticipate that some of these benefits from the net operating losses and built-in losses will not ultimately be realized; however, that amount is subject to continuing analysis and has not yet been determined.

Summary

Management believes the accounting estimates related to the ALL, the valuation of OREO, the carrying value of securities, business combination accounting, and the valuation allowance for deferred tax assets are “critical accounting estimates” because: (1) the estimates are highly susceptible to change from period to period as they require management to make assumptions concerning the changes in the types and volumes of the portfolios and anticipated economic conditions, and (2) the impact of recognizing an impairment or loan loss could have a material effect on the FNB's assets reported on the balance sheet as well as its net earnings.

Non-GAAP Measures

This quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with GAAP. We use these non-GAAP measures in our analysis of FNB's performance. Some of these non-GAAP measures exclude goodwill and core deposit premiums from the calculations of return on average assets and return on average equity. We believe presentations of financial measures excluding the impact of goodwill and core deposit premiums provide useful supplemental information that is essential to a proper understanding of the operating results of our core businesses. In addition, certain designated net interest income amounts are presented on a taxable equivalent basis. We believe that the presentation of net interest income on a taxable equivalent basis aids in the comparability of net interest income arising from taxable and tax-exempt sources. Further, we use other non-GAAP measures that exclude preferred stock and common stock warrants to report equity available to holders of our common stock. We believe that measures that exclude these items provide useful supplemental information that enhances an understanding of the equity that is available to holders of different classes of FNB's stock.

These disclosures should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The non-GAAP financial measures used in this Report are “common shareholders' equity,” “tangible common shareholders' equity,” “tangible equity,” “tangible assets” and “tangible book value.” FNB's management, the entire financial services sector, bank stock analysts, and bank regulators use these non-GAAP measures in their analysis of our performance.

• “Common shareholders' equity” is shareholders' equity reduced by preferred stock and the common stock warrant.

• “Tangible common shareholders' equity” is shareholders' equity reduced by preferred stock, the common stock warrant, goodwill and other intangible assets.

• “Tangible shareholders' equity” is shareholders' equity reduced by recorded goodwill, other intangible assets and preferred stock.

• “Tangible assets” are total assets reduced by recorded goodwill and other intangible assets.

• “Tangible book value” is defined as total equity reduced by recorded goodwill, other intangible assets and preferred stock divided by total common shares outstanding. This measure discloses changes from period-to-period in book value per share exclusive of changes in intangible assets and preferred stock. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing total book value while not increasing the tangible assets of a

51

company. Companies utilizing purchase accounting in a business combination, as required by GAAP, must record goodwill related to such transactions.

The following table provides a more detailed analysis of these non-GAAP measures:

(dollars in thousands, except per share data)	September 30, 2012			December 31, 2011			September 30, 2011
Total shareholders' equity/(deficit)	$	106,873		$	129,015		$	(129,932	)
Less:
Preferred stock	—			—			61,995
Common stock warrant	—			—			3,891
Common shareholders' equity/(deficit)	$	106,873		$	129,015		$	(195,818	)
Total shareholders' equity/(deficit)	$	106,873		$	129,015		$	(129,932	)
Less:
Goodwill	4,205			3,905			—
Core deposit and other intangibles	7,369			8,177			3,577
Preferred stock	—			—			61,995
Common stock warrant	—			—			3,891
Tangible common shareholders' equity/(deficit)	$	95,299		$	116,933		$	(199,395	)
Total shareholders' equity/(deficit)	$	106,873		$	129,015		$	(129,932	)
Less:
Goodwill	4,205			3,905			—
Core deposit and other intangibles	7,369			8,177			3,577
Tangible shareholders' equity/(deficit)	$	95,299		$	116,933		$	(133,509	)
Total assets	$	2,238,065		$	2,409,108		$	1,643,894
Less:
Goodwill	4,205			3,905			—
Core deposit and other intangibles	7,369			8,177			3,577
Tangible assets	$	2,226,491		$	2,397,026		$	1,640,317
Book value per common share	$	4.95		$	6.11		$	(1,714.03	)
Effect of intangible assets	(0.52		)	(0.57		)	(31.31		)
Tangible book value per common share	4.43			5.54			(1,745.34		)

Item 3.Quantitative and Qualitative Disclosures About Market Risk

The objective of FNB's asset/liability management function is long term maximization of net interest income within FNB risk guidelines. This objective is accomplished through management of our balance sheet composition, liquidity, and interest rate risk exposures arising from changing economic conditions, interest rates and customer preferences.

Management considers interest rate risk FNB's most significant market risk. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates. Consistency of our net interest income is largely dependent upon the effective management of interest rate risk.

To identify and manage its interest rate risk, we employ an earnings simulation model to analyze net interest income sensitivity to changing interest rates. The model is based on contractual cash flows and repricing characteristics and incorporates market-based assumptions regarding the effect of changing interest rates on the prepayment rates of certain assets and liabilities. The model also includes management projections for activity levels in each of the product lines offered by CommunityOne and Granite. Assumptions are inherently uncertain and the measurement of net interest income or the impact of rate fluctuations on net interest income cannot be precisely predicted. Actual results may differ from simulated results due to timing, magnitude, and frequency of interest changes as well as changes in market conditions and management strategies. FNB's Asset/Liability Management Committee (“ALCO”), which includes senior management representatives and reports to the Board of Directors, monitors and manages interest rate risk.

Management does not believe there has been any significant change in the overall performance of financial instruments considered market risk sensitive, as measured by the factors of contractual maturities, average interest rates and estimated fair values, since the analysis presented in the Form 10-K.

52

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of our disclosure controls and procedures (as defined in Sections 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934), was carried out under the supervision and with the participation of FNB's Chief Executive Officer and Chief Financial Officer and several other members of senior management as of September 30, 2012, the last day of the period covered by this Quarterly Report. FNB's Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2012 in ensuring that the information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is (i) accumulated and communicated to management (including FNB's Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.

Internal Control Changes

During the 3rd quarter we migrated the Bank of Granite's core systems and processes onto the FNB United platform and infrastructure. As part of this migration we replaced end of life equipment, consolidated core loan, deposit and general ledger processing onto a common infrastructure, and implemented enhanced information security processes and procedures.

53

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

In the ordinary course of operations, FNB is party to various legal proceedings. Other than noted below, FNB is not involved in, nor has it terminated during the nine months ended September 30, 2012, any pending legal proceedings other than routine, nonmaterial proceedings occurring in the ordinary course of business.

As described in Item 3., Legal Proceedings, of the Form 10-K, Howe Barnes Hoefer & Arnett, Inc., an affiliate of Raymond James Financial, Inc., filed a complaint in Wake County Superior Court in North Carolina seeking monetary damages against FNB and CommunityOne. There has been no change in the status of this litigation since the filing date of the complaint.

Item 1A.     Risk Factors

There have been no material changes to the risk factors that we have previously disclosed in Item 1A - “Risk Factors” in our Form 10-K.

Item 2.Unregistered Sales of Equity Securities and Repurchases

Not Applicable

Item 3.Defaults Upon Senior Securities

Not Applicable

Item 4.Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

Item 6.Exhibits

Exhibits to this report are listed in the Index to Exhibits on page 57 of this report.

54

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 thereunto duly authorized.

FNB United Corp.

(Registrant)

Date: November 5, 2012                    By:    /s/ DAVID L. NIELSEN

David L. Nielsen

Executive Vice President and Chief

Financial Officer

(Principal Financial and Accounting Officer)

55

INDEX TO EXHIBITS

Exhibit No.Description of Exhibit

31.1    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101     Financial Statements submitted in XBRL format

56

EX-31.01

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Brian E. Simpson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FNB United Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:    November 5, 2012/s/ BRIAN E. SIMPSON

Brian E. Simpson

Chief Executive Officer

EX-31.02

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David L. Nielsen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FNB United Corp.;

1. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

2. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

3. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

4. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:    November 5, 2012/s/ DAVID L. NIELSEN

David L. Nielsen

Chief Financial Officer

EX-32.01

Exhibit 32

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of FNB United Corp., a North Carolina corporation (the “Corporation”), does hereby certify that:

The Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (the “Form 10-Q”) of the Corporation fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all materials respects, the financial condition and results of operations of the Corporation.

Date:    November 5, 2012/s/ BRIAN E. SIMPSON

Brian E. Simpson        

Chief Executive Officer

Date:    November 5, 2012/s/ DAVID L. NIELSEN

David L. Nielsen

Chief Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

XML

Loans (Past Due Status) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due, 30 - 59 days	$ 5,899	$ 10,395
Past due, 60 - 89 days	6,992	11,807
Past due, 90 or more days	63,724	54,711
Past due, total	76,615	76,913
Current	902,975	809,786
PI loans, no credit deterioration	220,404	330,836
PI loans, credit deterioration	31,801	0
Loans and leases receivable	1,231,795	1,217,535
90 or more days past due and accruing	1,071	3,000
Commercial and agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due, 30 - 59 days	927	335
Past due, 60 - 89 days	832	425
Past due, 90 or more days	2,511	2,755
Past due, total	4,270	3,515
Current	51,718	62,702
PI loans, no credit deterioration	1,021	28,872
PI loans, credit deterioration	15,660	0
Loans and leases receivable	72,669	95,089
90 or more days past due and accruing	671	305
Real estate - construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due, 30 - 59 days	605	1,850
Past due, 60 - 89 days	1,503	2,206
Past due, 90 or more days	15,842	21,438
Past due, total	17,950	25,494
Current	40,549	59,671
PI loans, no credit deterioration	543	7,641
PI loans, credit deterioration	2,221	0
Loans and leases receivable	61,263	92,806
90 or more days past due and accruing	0	1,400
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due, 30 - 59 days	972	4,544
Past due, 60 - 89 days	2,772	2,253
Past due, 90 or more days	13,942	14,125
Past due, total	17,686	20,922
Current	530,027	379,909
PI loans, no credit deterioration	39,943	52,894
PI loans, credit deterioration	2,595	0
Loans and leases receivable	590,251	453,725
90 or more days past due and accruing	58	292
Real estate - mortgage, commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due, 30 - 59 days	3,221	2,926
Past due, 60 - 89 days	1,872	6,645
Past due, 90 or more days	31,316	16,330
Past due, total	36,409	25,901
Current	237,940	265,861
PI loans, no credit deterioration	177,533	239,621
PI loans, credit deterioration	11,291	0
Loans and leases receivable	463,173	531,383
90 or more days past due and accruing	339	1,003
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past due, 30 - 59 days	174	740
Past due, 60 - 89 days	13	278
Past due, 90 or more days	113	63
Past due, total	300	1,081
Current	42,741	41,643
PI loans, no credit deterioration	1,364	1,808
PI loans, credit deterioration	34	0
Loans and leases receivable	44,439	44,532
90 or more days past due and accruing	3	0
Granite Corp [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans and leases receivable	287,302	373,488
Granite Corp [Member] | Real estate - construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans and leases receivable	$ 2,764	$ 7,641

XML

Earnings Per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share Disclosure [Line Items]
Antidilutive shares excluded from EPS calculation	23,347	26,821	23,552	27,218
Dividends on preferred stock	$ 0	$ 1,093,000	$ 0	$ 3,197,000
Accretion of discount on preferred stock				0
Stock Options [Member]
Earnings Per Share Disclosure [Line Items]
Antidilutive shares excluded from EPS calculation	1,275	4,750	1,480	4,750
Preferred stock Series A [Member]
Earnings Per Share Disclosure [Line Items]
Unpaid cumulative dividends				4,200,000
Dividends on preferred stock		1,100,000		3,200,000
Accretion of discount on preferred stock		$ 200,000		$ 600,000

XML

Loans (Allowance for Loan Losses, by Segment Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance, beginning of period	$ 38,551	$ 59,366	$ 39,360	$ 93,687
Charge-offs	(9,276)	(24,376)	(23,580)	(115,948)
Recoveries	1,552	1,950	4,202	5,438
Provision for losses charged to continuing operations	32	7,181	10,877	60,944
Balance, end of period	30,859	44,121	30,859	44,121
Commercial and agricultural [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance, beginning of period	7,151	6,527	5,776	11,144
Charge-offs	(1,156)	(1,988)	(2,774)	(10,455)
Recoveries	286	226	777	759
Provision for losses charged to continuing operations	(1,128)	204	1,374	3,521
Balance, end of period	5,153	4,969	5,153	4,969
Real estate - construction [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance, beginning of period	11,320	28,419	11,995	46,792
Charge-offs	(2,465)	(13,740)	(8,761)	(57,912)
Recoveries	323	1,217	1,169	2,121
Provision for losses charged to continuing operations	(3,195)	4,606	1,580	29,501
Balance, end of period	5,983	20,502	5,983	20,502
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance, beginning of period	8,784	9,030	8,885	7,742
Charge-offs	(1,646)	(1,958)	(4,805)	(8,579)
Recoveries	69	59	447	621
Provision for losses charged to continuing operations	2,787	(134)	5,467	7,213
Balance, end of period	9,994	6,997	9,994	6,997
Real estate - mortgage, commercial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance, beginning of period	9,218	13,619	11,063	26,851
Charge-offs	(2,602)	(5,848)	(3,594)	(36,028)
Recoveries	388	96	725	838
Provision for losses charged to continuing operations	54	2,259	(1,136)	18,465
Balance, end of period	7,058	10,126	7,058	10,126
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance, beginning of period	2,078	1,771	1,641	1,158
Charge-offs	(1,407)	(842)	(3,646)	(2,974)
Recoveries	486	352	1,084	1,099
Provision for losses charged to continuing operations	1,514	246	3,592	2,244
Balance, end of period	$ 2,671	$ 1,527	$ 2,671	$ 1,527

XML

Earnings Per Share (EPS Calculation) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share [Abstract]
Net loss from continuing operations before cumulative dividends on preferred stock	$ (4,712)	$ (13,890)	$ (33,682)	$ (100,889)
Dividends on preferred stock	0	(1,093)	0	(3,197)
Loss from continuting operations, net of tax	(4,712)	(14,983)	(33,682)	(104,086)
Loss from discontinued operations, net of tax	0	(40)	(27)	(5,722)
Net loss to common shareholders	$ (4,712)	$ (15,023)	$ (33,709)	$ (109,808)
Weighted average number of common shares outstanding - basic and diluted	21,588,027	114,320	21,294,727	114,277
Net loss per common share from continuing operations - basic and diluted	$ (0.22)	$ (131.06)	$ (1.58)	$ (910.82)
Net loss per common share from discontinued operations - basic and diluted	$ 0.00	$ (0.35)	$ 0.00	$ (50.07)
Net loss per common share - basic and diluted	$ (0.22)	$ (131.41)	$ (1.58)	$ (960.89)

XML

Loans (Purchased Loans with Deteriorated Credity Quality) (Details) (Granite Corp [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Granite Corp [Member]
Deterioarted Loans Acquired Movement Schedule [Roll Forward]
Balance, beginning of period	$ 330,836	$ 0
Addition from Bank of Granite Corp acquisition	0	351,121
Accretion	15,831	4,777
Payment received	(84,944)	(24,467)
Foreclosed and transferred to OREO	(9,518)	(595)
Subtotal before provision	(3,296)	0
Balance, end of period	248,909	330,836
Deteriorated Loans Acquired, Accretable Yield Movement Schedule [Roll Forward]
Future accretion balance, beginning of period	47,804	0
Future accretion, addition from Bank of Granite Corp Acquisition	0	52,581
Future accretion, accretion	(15,831)	(4,777)
Future accretion, reclass from non-accretable	4,592	0
Future accretion balance, end of period	$ 36,565	$ 47,804

XML

Investment Securities (Other Disclosures) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
FHLB stock	$ 6,300,000		$ 6,300,000		$ 6,300,000
FRBR stock	3,700,000		3,700,000		3,700,000
Investment securities portfolio available as lendable collateral	378,400,000		378,400,000
Book value of securities sold	21,400,000	252,700,000	134,100,000	282,900,000
Gain on securities sold	(33,000)	7,393,000	1,923,000	7,308,000
Deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment securities portfolio pledged as collateral	93,400,000		93,400,000
Retail repurchase agreements [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment securities portfolio pledged as collateral	14,500,000		14,500,000
Federal Reserve Bank of Richmond [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment securities portfolio pledged as collateral	4,000,000		4,000,000
Others [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment securities portfolio pledged as collateral	$ 2,100,000		$ 2,100,000

XML

Fair Values of Assets and Liabilities (Measured on Recurring Basis) (Details) (Continuing operations [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Loans held for sale	$ 8,212	$ 4,529
Available-for-sale investment securities	492,386	431,306
Recurring [Member] | Total [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	492,386	431,306
Mortgage servicing rights	248
Total assets at fair value	492,634	431,306
Recurring [Member] | Total [Member] | U.S, Treasury and government agencies debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	6,922	7,188
Recurring [Member] | Total [Member] | U.S. government sponsored agencies debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	22,185	32,364
Recurring [Member] | Total [Member] | States and political subdivisions debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	6,062	6,090
Recurring [Member] | Total [Member] | Residential mortgage-backed securities - GSE [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	367,767	350,273
Recurring [Member] | Total [Member] | Residential mortgage-backed securities - private [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	23,722	32,217
Recurring [Member] | Total [Member] | Commercial mortgage-backed securities - private [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	5,360
Recurring [Member] | Total [Member] | Corporate notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	37,120	3,174
Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	492,386	431,306
Total assets at fair value	492,386	431,306
Recurring [Member] | Level 2 [Member] | U.S, Treasury and government agencies debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	6,922	7,188
Recurring [Member] | Level 2 [Member] | U.S. government sponsored agencies debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	22,185	32,364
Recurring [Member] | Level 2 [Member] | States and political subdivisions debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	6,062	6,090
Recurring [Member] | Level 2 [Member] | Residential mortgage-backed securities - GSE [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	367,767	350,273
Recurring [Member] | Level 2 [Member] | Residential mortgage-backed securities - private [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	23,722	32,217
Recurring [Member] | Level 2 [Member] | Commercial mortgage-backed securities - private [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	5,360
Recurring [Member] | Level 2 [Member] | Corporate notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Available-for-sale investment securities	37,120	3,174
Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Mortgage servicing rights	248
Total assets at fair value	$ 248

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

As required for entities with complex capital structures, a dual presentation of basic and diluted EPS is included on the face of the income statement, and a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation is provided in this note.

(dollars in thousands, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss from continuing operations before cumulative dividends on preferred stock	$	(4,712	)	$	(13,890	)	$	(33,682	)	$	(100,889	)
Dividends on preferred stock	—			(1,093		)	—			(3,197		)
Loss from continuing operations, net of tax	(4,712		)	(14,983		)	(33,682		)	(104,086		)
Loss from discontinued operations, net of tax	—			(40		)	(27		)	(5,722		)
Net loss to common shareholders	$	(4,712	)	$	(15,023	)	$	(33,709	)	$	(109,808	)
Weighted average number of common shares outstanding - basic and diluted	21,588,027			114,320			21,294,727			114,277
Net loss per common share from continuing operations - basic and diluted	$	(0.22	)	$	(131.06	)	$	(1.58	)	$	(910.82	)
Net loss per common share from discontinued operations - basic and diluted	—			(0.35		)	—			(50.07		)
Net loss per common share - basic and diluted	(0.22		)	(131.41		)	(1.58		)	(960.89		)

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Loans (Troubled Debt Restructuring) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012 loans	Sep. 30, 2011 loans	Sep. 30, 2012 loans	Sep. 30, 2011 loans
Financing Receivable, Modifications [Line Items]
Number of loans	1	3	20	33
Pre-modification outstanding recorded investment	$ 202	$ 1,806	$ 4,142	$ 12,472
Post-modification outstanding recorded investment	202	1,806	3,216	12,472
Commercial and agricultural [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	0	6
Pre-modification outstanding recorded investment	0	0	0	555
Post-modification outstanding recorded investment	0	0	0	555
Real estate - construction [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	9	6
Pre-modification outstanding recorded investment	0	0	2,526	3,612
Post-modification outstanding recorded investment	0	0	1,603	3,612
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	1	1	3	8
Pre-modification outstanding recorded investment	202	155	260	401
Post-modification outstanding recorded investment	202	155	260	401
Real estate - mortgage, commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	0	2	8	13
Pre-modification outstanding recorded investment	0	1,651	1,356	7,904
Post-modification outstanding recorded investment	0	1,651	1,353	7,904
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	0	0
Pre-modification outstanding recorded investment	0	0	0	0
Post-modification outstanding recorded investment	$ 0	$ 0	$ 0	$ 0

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Loans (Impaired Loans Disclosure) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment	$ 72,402	$ 53,884
With an allowance recorded, recorded investment	14,769	42,357
Impaired Financing Receivable, Recorded Investment	87,171	96,241
With no related allowance recorded, unpaid principal balance	90,568	76,783
With an allowance recorded, unpaid principal balance	16,324	44,208
Impaired Financing Receivable, Unpaid Principal Balance	106,892	120,991
Related allowance	4,522	11,090
Purchased impaired loans with subsequent deterioration	31,801	0
Purchased impaired loans with subsequent credit deterioration, unpaid principal balance	32,632
Purchased impaired loans with subsequent deterioration, related allowance	3,296	0
Commercial and agricultural [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment	1,295	2,354
With an allowance recorded, recorded investment	1,272	1,536
Impaired Financing Receivable, Recorded Investment	2,567	3,890
With no related allowance recorded, unpaid principal balance	2,017	4,346
With an allowance recorded, unpaid principal balance	1,280	2,047
Impaired Financing Receivable, Unpaid Principal Balance	3,297	6,393
Related allowance	815	1,506
Purchased impaired loans with subsequent deterioration	15,660	0
Purchased impaired loans with subsequent credit deterioration, unpaid principal balance	15,685
Purchased impaired loans with subsequent deterioration, related allowance	1,774
Real estate - construction [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment	14,887	16,351
With an allowance recorded, recorded investment	2,623	14,109
Impaired Financing Receivable, Recorded Investment	17,510	30,460
With no related allowance recorded, unpaid principal balance	20,816	25,714
With an allowance recorded, unpaid principal balance	2,914	14,718
Impaired Financing Receivable, Unpaid Principal Balance	23,730	40,432
Related allowance	1,158	4,899
Purchased impaired loans with subsequent deterioration	2,221	0
Purchased impaired loans with subsequent credit deterioration, unpaid principal balance	2,195
Purchased impaired loans with subsequent deterioration, related allowance	135
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment	13,923	13,003
With an allowance recorded, recorded investment	6,091	11,883
Impaired Financing Receivable, Recorded Investment	20,014	24,886
With no related allowance recorded, unpaid principal balance	16,640	19,657
With an allowance recorded, unpaid principal balance	7,272	12,328
Impaired Financing Receivable, Unpaid Principal Balance	23,912	31,985
Related allowance	1,797	2,140
Purchased impaired loans with subsequent deterioration	2,595	0
Purchased impaired loans with subsequent credit deterioration, unpaid principal balance	2,879
Purchased impaired loans with subsequent deterioration, related allowance	604
Real estate - mortgage, commercial [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment	42,297	22,176
With an allowance recorded, recorded investment	4,683	14,659
Impaired Financing Receivable, Recorded Investment	46,980	36,835
With no related allowance recorded, unpaid principal balance	50,861	26,964
With an allowance recorded, unpaid principal balance	4,758	14,943
Impaired Financing Receivable, Unpaid Principal Balance	55,619	41,907
Related allowance	652	2,415
Purchased impaired loans with subsequent deterioration	11,291	0
Purchased impaired loans with subsequent credit deterioration, unpaid principal balance	11,829
Purchased impaired loans with subsequent deterioration, related allowance	749
Consumer [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, recorded investment	0	0
With an allowance recorded, recorded investment	100	170
Impaired Financing Receivable, Recorded Investment	100	170
With no related allowance recorded, unpaid principal balance	234	102
With an allowance recorded, unpaid principal balance	100	172
Impaired Financing Receivable, Unpaid Principal Balance	334	274
Related allowance	100	130
Purchased impaired loans with subsequent deterioration	34	0
Purchased impaired loans with subsequent credit deterioration, unpaid principal balance	44
Purchased impaired loans with subsequent deterioration, related allowance	$ 34

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Loans (Credit Quality Indicator) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	$ 1,231,795		$ 1,217,535
Substandard or Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans purchased in the Merger	70,000		63,600
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	979,993		910,650
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	81,616		130,677
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	169,508	[1]	174,795	[2]
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	678	[1]	1,413	[2]
Commercial and agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	72,669		95,089
Commercial and agricultural [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	60,547		77,305
Commercial and agricultural [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	3,964		7,373
Commercial and agricultural [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	8,154	[1]	9,921	[2]
Commercial and agricultural [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	4	[1]	490	[2]
Real estate - construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	61,263		92,806
Real estate - construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	38,622		53,105
Real estate - construction [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	1,944		5,797
Real estate - construction [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	20,697	[1]	33,886	[2]
Real estate - construction [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	0	[1]	18	[2]
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	590,251		453,725
Real estate - mortgage, 1-4 family residential [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	534,269		385,022
Real estate - mortgage, 1-4 family residential [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	17,873		25,864
Real estate - mortgage, 1-4 family residential [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	37,844	[1]	42,630	[2]
Real estate - mortgage, 1-4 family residential [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	265	[1]	209	[2]
Real estate - mortgage, commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	463,173		531,383
Real estate - mortgage, commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	302,943		351,731
Real estate - mortgage, commercial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	57,647		91,364
Real estate - mortgage, commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	102,439	[1]	87,971	[2]
Real estate - mortgage, commercial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	144	[1]	317	[2]
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	44,439		44,532
Consumer [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	43,612		43,487
Consumer [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	188		279
Consumer [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	374	[1]	387	[2]
Consumer [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment	$ 265	[1]	$ 379	[2]

[1] (dollars in thousands) Pass Special Mention Substandard Doubtful (Ratings 1-5) (Rating 6) (Rating 7) (Rating 8) TotalCommercial and agricultural $60,547 $3,964 $8,154 $4 $72,669Real estate - construction 38,622 1,944 20,697 — 61,263Real estate - mortgage: 1-4 family residential 534,269 17,873 37,844 265 590,251Commercial 302,943 57,647 102,439 144 463,173Consumer 43,612 188 374 265 44,439Total $979,993 $81,616 $169,508 $678 $1,231,795

[2]

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Other Real Estate Owned and Property Acquired in Settlement of Loans (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Repossessed Assets [Abstract]
Decrease in total OREO and foreclosed assets	$ 29,600,000
Total OREO and foreclosed assets as a percentage of total nonperforming assets	48.00%		51.00%
Real estate acquired in settlement of loans	80,482,000	86,183,000	110,009,000	96,099,000	101,384,000	62,058,000
Personal property acquired in settlement of loans	318,000		377,000
Total property acquired in settlement of loans	$ 80,800,000		$ 110,386,000

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Fair Values of Assets and Liabilities (Fair Value of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Continuing operations [Member] | Carrying value [Member]
Fair Value, Balance Sheet [Line Items]
Cash and cash equivalents	$ 327,870	$ 553,416
Available-for-sale investment securities	492,386	431,306
Loans held for sale	8,212	4,529
Loans, net	1,200,936	1,178,175
Accrued interest receivable	7,424	5,919
Deposits	1,982,253	2,129,111
Retail repurchase agreements	9,433	8,838
Federal Home Loan Bank advances	58,339	58,370
Junior subordinated debentures	56,702	56,702
Accrued interest payable	1,969	1,654
Continuing operations [Member] | Estimated fair value [Member]
Fair Value, Balance Sheet [Line Items]
Cash and cash equivalents	327,870	553,416
Available-for-sale investment securities	492,386	431,306
Loans held for sale	8,212	4,529
Loans, net	1,192,784	1,176,795
Accrued interest receivable	7,424	5,919
Deposits	1,987,807	2,139,093
Retail repurchase agreements	9,433	8,838
Federal Home Loan Bank advances	63,649	62,555
Junior subordinated debentures	37,068	36,218
Accrued interest payable	1,969	1,654
Continuing operations [Member] | Level 1 [Member]
Fair Value, Balance Sheet [Line Items]
Cash and cash equivalents	327,870	553,416
Continuing operations [Member] | Level 2 [Member]
Fair Value, Balance Sheet [Line Items]
Available-for-sale investment securities	492,386	431,306
Loans held for sale	8,212	4,529
Accrued interest receivable	7,424	5,919
Deposits	1,987,807	2,139,093
Retail repurchase agreements	9,433	8,838
Federal Home Loan Bank advances	63,649	62,555
Accrued interest payable	1,969	1,654
Continuing operations [Member] | Level 3 [Member]
Fair Value, Balance Sheet [Line Items]
Loans, net	1,192,784	1,176,795
Junior subordinated debentures	37,068	36,218
Discontinued operations [Member] | Carrying value [Member]
Fair Value, Balance Sheet [Line Items]
Financial assets	0	233
Financial liabilities	0
Discontinued operations [Member] | Estimated fair value [Member]
Fair Value, Balance Sheet [Line Items]
Financial assets	0	233
Financial liabilities	$ 0

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Loans (Allowance for Loan Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011		Dec. 31, 2011
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of period	$ 38,551		$ 59,366		$ 39,360		$ 93,687
Charge-offs	(9,276)		(24,376)		(23,580)		(115,948)
Recoveries	1,552		1,950		4,202		5,438
Net charge-offs	(7,724)		(22,426)		(19,378)		(110,510)
Balance, end of period	30,859		44,121		30,859		44,121
Annualized net charge-offs during the period to average loans	2.46%		9.07%		2.06%		13.09%
Annualized net charge-offs during the period to ALL	100.12%		201.66%		83.73%		334.88%
Allowance for loan losses to loans held for investment	2.51%	[1]	4.95%	[1]	2.51%	[1]	4.95%	[1]	3.23%
Continuing operations [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Provision for losses	$ 32		$ 7,181		$ 10,877		$ 60,944

[1] Excludes discontinued operations.

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Basis of Presentation

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Nature of Operations

FNB United Corp., we or us (which also refers to FNB and our subsidiaries on a consolidated basis) ("FNB"), is a bank holding company incorporated in 1984 under the laws of the State of North Carolina. We own two bank subsidiaries: CommunityOne Bank, N.A. (“CommunityOne”), a national banking association headquartered in Asheboro, North Carolina and, through Bank of Granite Corporation (“Granite Corp.”), Bank of Granite (“Granite”), a state chartered bank headquartered in Granite Falls, North Carolina.

Through our bank subsidiaries, we offer a complete line of consumer, wealth management, mortgage and business banking services, including loan, deposit, cash management, investment management and trust services, to individual and business customers through operations located throughout central, southern and western North Carolina, including the counties of Alamance, Alexander, Ashe, Burke, Caldwell, Catawba, Chatham, Gaston, Guilford, Iredell, Mecklenburg, Montgomery, Moore, Orange, Randolph, Richmond, Rowan, Scotland, Watauga and Wilkes. Management believes that the banks have a relatively stable deposit base and no material amount of deposits is obtained from a single depositor or group of depositors, including federal, state and local governments.

CommunityOne owns two subsidiaries: Dover Mortgage Company (“Dover”) and First National Investor Services, Inc. Dover previously engaged in the business of originating, underwriting and closing mortgage loans for sale in the secondary market. Dover ceased operations in the first quarter of 2011 and filed for Chapter 11 bankruptcy on February 15, 2012. First National Investor Services, Inc. holds deeds of trust for CommunityOne. Through Granite Corp., we also own Granite Mortgage, Inc., which ceased mortgage operations in 2009 and filed for Chapter 11 bankruptcy on February 15, 2012. FNB also owns FNB United Statutory Trust I, FNB United Statutory Trust II, and Catawba Valley Capital Trust II, which were formed to facilitate the issuance of trust preferred securities.

On October 21, 2011, as part of the recapitalization of FNB, FNB acquired Granite Corp., through the merger of a wholly owned subsidiary of FNB merging into Granite Corp. (the "Merger"). The Merger was part of FNB's recapitalization strategy.

General

The accompanying consolidated financial statements, prepared without audit, include the accounts of FNB and its subsidiaries. All significant intercompany balances and transactions have been eliminated. Descriptions of the organization and business of FNB, accounting policies followed by FNB and other relevant information are contained in FNB's Annual Report on Form 10-K for the year ended December 31, 2011, as amended by its Amendment No. 1 (the "Form 10-K"), including the notes to the consolidated financial statements filed as part of that report. This quarterly report should be read in conjunction with the Form 10-K.

In the opinion of management, the accompanying condensed consolidated financial statements contain all the adjustments, all of which are normal recurring adjustments, necessary to present fairly the financial position of FNB as of September 30, 2012 and December 31, 2011, and the results of its operations and cash flows for the three and nine months ended September 30, 2012 and 2011, respectively.

All financial information is reported on a continuing operations basis, unless otherwise noted. See Note 2 to the consolidated financial statements for a discussion regarding discontinued operations and certain assets and liabilities at September 30, 2012 and December 31, 2011.

Use of Estimates

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States ("GAAP"). Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowances for loan losses (“ALL”), the carrying value of other real estate owned (“OREO”), the carrying value of intangible assets, the fair value of net assets acquired in the Merger and the realization of deferred tax assets.

Reclassification

Certain reclassifications have been made to the prior period consolidated financial statements to place them on a comparable basis with the current period consolidated financial statements. These reclassifications have no effect on net income or shareholders' equity as previously reported.

During the first quarter of 2012, FNB implemented a purchased loan accounting system and finalized its methodology to allocate the fair value of purchased impaired loans in pools to individual loans for purposes of several of the loan disclosure tables in Note 5 to the consolidated financial statements. In order to present these tables for prior periods on a comparable basis to current period tables in these consolidated financial statements, we have reclassified certain amounts as of December 31, 2011 in the tables between loan portfolio segments and classes, between purchased contractual and purchased impaired loans, and between risk grade categories. These reclassifications have no effect on net income, the loan fair value mark, total loans or shareholders' equity as of or for the period ended December 31, 2011.

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date of this filing and has concluded that no subsequent events have occurred requiring accrual or disclosure in addition to that included herein.

Recent Accounting Pronouncements

Disclosures about Fair Value -Accounting Standards Update ("ASU") 2011-04 was issued in May 2011 to amend the Fair Value Measurement topic of the Accounting Standards Codification ("ASC") by clarifying the application of existing fair value measurement and disclosure requirements and by changing particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The amendment was effective for FNB on January 1, 2012, and the related disclosures are presented in Note 9.

Comprehensive Income - The Comprehensive Income topic of the ASC was amended in June 2011. The amendment eliminates the option to present other comprehensive income as a part of the statement of changes in shareholders' equity and requires consecutive presentation of the statement of net income and other comprehensive income. The amendments were to become applicable to FNB on January 1, 2012 and were to be applied retrospectively. In December 2011, the topic was further amended to defer the effective date of presenting reclassification adjustments from other comprehensive income to net income on the face of the financial statements. Companies should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect prior to the amendments while FASB redeliberates future requirements. The remaining provisions of this update took effect for FNB on January 1, 2012.

Goodwill - The Intangibles - Goodwill and Other topic of the ASC was amended in September 2011. The amendments in this Update allow an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessment, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, they will have to perform the first step of the two-step impairment test. Under the amendments in this Update, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. The amendment was effective for FNB on January 1, 2012, and has not had a material impact on the financial statements of FNB.

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Capital Raise (Details) (USD $)	1 Months Ended		9 Months Ended
	Jul. 31, 2012	Jun. 26, 2012	Sep. 30, 2012	Sep. 30, 2011
Equity [Abstract]
Issuance of stock, shares	176	485,788
Issuance of stock, average price per share		$ 15.01
Gross proceeds from issuance of stock			$ 7,290,000
Issuance of common stock, net of expense	$ 3,000,000	$ 6,700,000	$ 6,696,000	$ 0

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Loans (Impaired Loans, Average Recorded Investment and Interest Income Recognized) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Financing Receivable, Impaired [Line Items]
With no related alowance recorded, average recorded investment	$ 75,948	$ 75,342	$ 81,445	$ 121,482
With no related allowance recorded, interest income recognized	812	0	2,188	2
With an allowance recorded, average recorded investment	15,301	88,861	15,790	125,182
With an allowance recorded, interest income recognized	84	0	378	1
Impaired Financing Receivable, Average Recorded Investment	91,249	164,203	97,235	246,664
Impaired Financing Receivable, Interest Income, Cash Basis Method	896	0	2,566	3
Commercial and agricultural [Member]
Financing Receivable, Impaired [Line Items]
With no related alowance recorded, average recorded investment	1,557	2,417	1,879	3,305
With no related allowance recorded, interest income recognized	56	0	152	0
With an allowance recorded, average recorded investment	1,274	2,751	1,266	5,803
With an allowance recorded, interest income recognized	6	0	36	0
Impaired Financing Receivable, Average Recorded Investment	2,831	5,168	3,145	9,108
Impaired Financing Receivable, Interest Income, Cash Basis Method	62	0	188	0
Real estate - construction [Member]
Financing Receivable, Impaired [Line Items]
With no related alowance recorded, average recorded investment	15,484	29,789	18,140	49,617
With no related allowance recorded, interest income recognized	104	0	350	0
With an allowance recorded, average recorded investment	2,802	47,884	2,873	60,131
With an allowance recorded, interest income recognized	9	0	32	0
Impaired Financing Receivable, Average Recorded Investment	18,286	77,673	21,013	109,748
Impaired Financing Receivable, Interest Income, Cash Basis Method	113	0	382	0
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Impaired [Line Items]
With no related alowance recorded, average recorded investment	14,265	13,585	15,096	18,628
With no related allowance recorded, interest income recognized	81	0	292	1
With an allowance recorded, average recorded investment	6,436	16,268	6,869	16,027
With an allowance recorded, interest income recognized	41	0	163	0
Impaired Financing Receivable, Average Recorded Investment	20,701	29,853	21,965	34,655
Impaired Financing Receivable, Interest Income, Cash Basis Method	122	0	455	1
Real estate - mortgage, commercial [Member]
Financing Receivable, Impaired [Line Items]
With no related alowance recorded, average recorded investment	44,480	29,453	46,051	49,736
With no related allowance recorded, interest income recognized	567	0	1,388	1
With an allowance recorded, average recorded investment	4,689	21,647	4,687	42,990
With an allowance recorded, interest income recognized	27	0	145	1
Impaired Financing Receivable, Average Recorded Investment	49,169	51,100	50,738	92,726
Impaired Financing Receivable, Interest Income, Cash Basis Method	594	0	1,533	2
Consumer [Member]
Financing Receivable, Impaired [Line Items]
With no related alowance recorded, average recorded investment	162	98	279	196
With no related allowance recorded, interest income recognized	4	0	6	0
With an allowance recorded, average recorded investment	100	311	95	231
With an allowance recorded, interest income recognized	1	0	2	0
Impaired Financing Receivable, Average Recorded Investment	262	409	374	427
Impaired Financing Receivable, Interest Income, Cash Basis Method	$ 5	$ 0	$ 8	$ 0

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Discontinued Operations (Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Discontinued Operations, Balance Sheet Disclosure [Line Items]
Assets from discontinued operations	$ 0	$ 245
Liabilities from discontinued operations	0	1,092
Dover [Member]
Discontinued Operations, Balance Sheet Disclosure [Line Items]
Loans held for sale	0	233
Premises and equipment, net	0	5
Other real estate owned	0	0
Other assets	0	7
Assets from discontinued operations	0	245
Other liabilities	0	1,092
Liabilities from discontinued operations	$ 0	$ 1,092

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Basis of Presentation (Details)	Sep. 30, 2012 banks
Nature of Operations [Line Items]
Number of subsidiaries	2
CommunityOne [Member]
Nature of Operations [Line Items]
Number of subsidiaries	2

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Derivative Financial Instruments (Details) (USD $)	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Designated as hedges [Member] | Interest rate swap contracts - FHLB advances [Member] | Other income [Member]
Derivative [Line Items]
Gain recognized in income, net of tax	$ 0		$ 463,000		$ 0		$ 565,000
Designated as hedges [Member] | Fair value hedge [Member] | Interest rate swap contracts - FHLB advances [Member]
Derivative [Line Items]
Impact on interest expense, decrease (increase)			(175,000,000)				(629,000,000)
Fair value			800,000				800,000
Gain (loss) recognized in income							933,000,000
Not designated as hedges [Member] | Continuing operations [Member]
Derivative [Line Items]
Gain (loss) recognized in income	0		0		0		11,000
Not designated as hedges [Member] | Continuing operations [Member] | Mortgage loan rate lock commitments [Member]
Derivative [Line Items]
Gain (loss) recognized in income	134,000	[1]	0	[1]	311,000	[1]	55,000	[1]
Not designated as hedges [Member] | Continuing operations [Member] | Mortgage loan forward sales and MBS [Member]
Derivative [Line Items]
Gain (loss) recognized in income	$ (134,000)	[1]	$ 0	[1]	$ (311,000)	[1]	$ (44,000)	[1]

[1] For 2011, recognized in "Net loss from discontinued operations" in FNB's Consolidated Statements of Operations.

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Loans (Loans Sold) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012 loans	Sep. 30, 2011 loans	Sep. 30, 2012 loans	Sep. 30, 2011 loans	Dec. 31, 2011
Financing Receivable [Line Items]
Net deferred loan premiums (discounts)	$ (2,600,000)		$ (2,600,000)		$ 1,800,000
Unpaid principal balance for loans serviced for others	33,600,000		33,600,000		2,000,000
Number of loans sold	1	23	9	37
Recorded investment of loans sold	602,000	13,442,000	6,267,000	33,730,000
Contract pricing of loans sold	540,000	11,194,000	6,486,000	26,365,000
Commercial and agricultural [Member]
Financing Receivable [Line Items]
Number of loans sold	0	9	0	14
Recorded investment of loans sold	0	217,000	0	3,505,000
Contract pricing of loans sold	0	1,238,000	0	3,190,000
Real estate - construction [Member]
Financing Receivable [Line Items]
Number of loans sold	0	8	0	13
Recorded investment of loans sold	0	6,406,000	0	16,723,000
Contract pricing of loans sold	0	4,927,000	0	11,899,000
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable [Line Items]
Number of loans sold		0	7	1
Recorded investment of loans sold		0	1,865,000	1,335,000
Contract pricing of loans sold		0	1,896,000	900,000
Real estate - mortgage, commercial [Member]
Financing Receivable [Line Items]
Number of loans sold	1	5	2	8
Recorded investment of loans sold	602,000	6,723,000	4,402,000	12,071,000
Contract pricing of loans sold	540,000	4,839,000	4,590,000	10,186,000
Consumer [Member]
Financing Receivable [Line Items]
Number of loans sold	0	1	0	1
Recorded investment of loans sold	0	96,000	0	96,000
Contract pricing of loans sold	$ 0	$ 190,000	$ 0	$ 190,000

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Discontinued Operations (Income Statement) (Details) (Dover [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Dover [Member]
Discontinued Operations, Income Statement Disclosure [Line Items]
Interest and fees on loans	$ 0	$ 12	$ 0	$ 67
Total interest income	0	12	0	67
Other borrowed funds	0	0	0	0
Total interest expense	0	0	0	0
Net Interest Income before Provision for Loan Losses	0	12	0	67
Provision for loan losses	0	0	0	0
Net Interest Income after Provision for Loan Losses	0	12	0	67
Mortgage loan loss	0	(2)	0	(167)
Other service charges, commissions and fees, net	0	0	0	(11)
Other income	0	0	0	10
Total noninterest loss	0	(2)	0	(168)
Personnel expense	0	(1)	1	1,442
Net occupancy expense	0	5	1	216
Furniture, equipment and data processing expense	0	14	0	185
Professional fees	0	31	25	209
Stationery, printing and supplies	0	0	0	8
Advertising and marketing	0	(1)	0	27
Other real estate owned expense	0	0	0	166
Provision for recourse loans	0	(8)	0	3,317
Other expense	0	10	0	264
Total noninterest expense	0	50	27	5,834
Loss before income taxes	0	(40)	(27)	(5,935)
Income tax (benefit)/expense	0	0	0	(213)
Net loss from discontinued operations, net of tax	$ 0	$ (40)	$ (27)	$ (5,722)

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Goodwill and Other Intangible Assets goodwill (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Additional goodwill	$ (0.3)

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities
Net loss	$ (33,709)	$ (106,611)
Net loss from discontinued operations	(27)	(5,722)
Net loss from continuing operations	(33,682)	(100,889)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization of premises and equipment	2,906	2,382
Provision for loan losses	10,877	60,944
Deferred income taxes	(128)	333
Deferred loan fees and costs, net	(3,432)	1,755
Premium amortization and discount accretion of investment securities, net	6,547	2,746
Net loss/(gain) on sale of investment securities	(1,923)	(7,308)
Amortization of core deposit premiums	1,056	596
Net accretion of purchase accounting adjustments	(19,661)	0
Adjustment to goodwill	(300)	0
Stock compensation expense	1	16
Increase in cash surrender value of bank-owned life insurance, net	(967)	(817)
Origination of loans held for sale	(40,078)	0
Net proceeds from sale of loans held for sale	32,425	(10)
Net loss/(gain) on sale of loans held for sale	(559)	10
Mortgage servicing rights amortization and impairment	0	145
Net loss on sales and write-downs of other real estate owned	16,091	27,683
Changes in assets and liabilities:
(Increase)/decrease in accrued interest receivable and other assets	431	13,836
Decrease in accrued interest payable and other liabilities	(2,742)	6,341
Net cash (used in)/provided by operating activities of continuing operations	(33,138)	7,763
Net effect of discontinued operations	(874)	31,768
Net cash (used in)/provided by operating activities	(34,012)	39,531
Investing Activities
Proceeds from sales, available-for-sale securities	133,241	290,185
Proceeds from maturities, calls and principal repayments, available-for-sale securities	120,718	50,047
Purchases, available-for-sale securities	(309,221)	(228,785)
Net (increase)/decrease in loans held for investment	(32,856)	173,938
Proceeds from sales of other real estate owned	37,528	39,521
Purchases of premises and equipment	(1,862)	(2,522)
Proceeds from sales of premises and equipment	36	0
Expenses paid in 2012 related to 2011 capital raise	(913)
Net cash (used in) provided by investing activities of continuing operations	(52,416)	322,384
Net effect of discontinued operations	0	22
Net cash (used in) provided by investing activities	(52,416)	322,406
Financing Activities
Net decrease in deposits	(145,465)	(130,754)
Increase in retail repurchase agreements	595	(2,737)
Decrease in Federal Home Loan Bank advances	(31)	(25,029)
Issuance of common stock, net of expense	6,696	0
Net cash used in financing activities of continuing operations	(139,118)	(158,520)
Net effect of discontinued operations	0	0
Net cash used in financing activities	(139,118)	(158,520)
Net (Decrease) Increase in Cash and Cash Equivalents	(225,546)	203,417
Cash and Cash Equivalents at Beginning of Period	553,416	160,594
Cash and Cash Equivalents at End of Period	327,870	364,011
Cash paid during the period for:
Interest	13,982	17,516
Noncash transactions:
Foreclosed loans transferred to other real estate owned	23,647	101,245
Loans to facilitate the sale of other real estate owned	778	0
Transfer of loans from held for investment to held for sale	600	0
Transfer of loans from held for sale to held for investment	1,119	0
Unrealized securities gains/(losses), net of income taxes	5,409	500
Conversion of subordinated debt to preferred stock	0	(5,000)
Issuance of preferred stock in subordinated debt conversion	$ 0	$ 5,000

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Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 482,979	$ 430,836
Gross unrealized gains	10,060	2,843
Gross unrealized losses	653	2,373
Estimated fair value	492,386	431,306
Obligations of U.S. Treasury and government agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	6,648	7,081
Gross unrealized gains	274	107
Gross unrealized losses	0	0
Estimated fair value	6,922	7,188
Obligations of U.S. government sponsored enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	22,128	32,479
Gross unrealized gains	57	36
Gross unrealized losses	0	151
Estimated fair value	22,185	32,364
Obligations of states and political subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	5,952	6,075
Gross unrealized gains	110	16
Gross unrealized losses	0	1
Estimated fair value	6,062	6,090
Residential mortgage-backed securities - GSE [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	359,241	348,884
Gross unrealized gains	8,666	2,611
Gross unrealized losses	140	1,222
Estimated fair value	367,767	350,273
Residential mortgage-backed securities - private [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	23,601	33,111
Gross unrealized gains	594	73
Gross unrealized losses	473	967
Estimated fair value	23,722	32,217
Commercial mortgage-backed securities - GSE [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	23,245
Gross unrealized gains	3
Gross unrealized losses	0
Estimated fair value	23,248
Commercial mortgage-backed securities - private [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	5,312
Gross unrealized gains	48
Gross unrealized losses	0
Estimated fair value	5,360
Corporate notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	36,852	3,206
Gross unrealized gains	308	0
Gross unrealized losses	40	32
Estimated fair value	$ 37,120	$ 3,174

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Loans (Impaired Loans) (Details) (USD $)	3 Months Ended
	Sep. 30, 2012		Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Impaired loans, held for sale	$ 0		$ 4,529,000
Impaired loans, no individually reviewed for impairment	7,274,000		5,127,000
Impaired loans, individually reviewed, with no impairment	72,402,000		53,884,000
Impaired loans, individually reviewed, with impairment	14,769,000		42,357,000
Total impaired loans, excluding purchased impaired	94,445,000	[1]	105,897,000	[1]
Purchased impaired loans with subsequent deterioration	31,801,000		0
Purchased impaired loans with no subsequent deterioration	220,404,000		330,836,000
Impaired loan, individually reviewed, with impairment, associated reserves	4,522,000	[1]	11,090,000	[1]
Purchased impaired loans with subsequent deterioration, associated reserves	3,296,000		0
Impaired financing receivable, including deteriorated loans purchased, related allowance	7,818,000		11,090,000
Imparied financing receivable, simple average balance	98,567,000		112,600,000
Restructured loans	21,400,000		28,300,000
Performing [Member]
Financing Receivable, Impaired [Line Items]
Restructured loans	$ 3,600,000		$ 2,900,000

[1] Included at September 30, 2012 and December 31, 2011 were $3.6 million and $2.9 million, respectively, in restructured and performing loans.

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Other Real Estate Owned and Property Acquired in Settlement of Loans (Real Estate Owned) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012 assets	Sep. 30, 2011	Sep. 30, 2012 assets	Sep. 30, 2011
Real Estate Acquired Through Foreclosure [Roll Forward]
Real estate acquired in settlement of loans, beginning of period	$ 86,183,000	$ 101,384,000	$ 110,009,000	$ 62,058,000
Plus: New real estate acquired in settlement of loans	9,746,000	27,278,000	24,766,000	101,245,000
Less: Sales of real estate acquired in settlement of loans	(13,826,000)	(29,122,000)	38,202,000	(39,521,000)
Less: Write-downs and net loss on sales charged to expense	(1,621,000)	(3,441,000)	(16,091,000)	(27,683,000)
Real estate acquired in settlement of loans, end of period	80,482,000	96,099,000	80,482,000	96,099,000
Number of assets under contract for sale	58		58
Net carrying value of assets under contract for sale	$ 18,200,000		$ 18,200,000

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 45,556	$ 35,773
Interest-bearing bank balances	282,314	517,643
Investment securities:
Available-for-sale, at estimated fair value (amortized cost of $482,979 in 2012 and $430,836 in 2011)	492,386	431,306
Loans held for sale	8,212	4,529
Loans held for investment	1,231,795	1,217,535
Less: Allowance for loan losses	(30,859)	(39,360)
Net loans held for investment	1,200,936	1,178,175
Premises and equipment, net	52,637	53,763
Other real estate owned and property acquired in settlement of loans	80,800	110,386
Core deposit premiums and other intangibles	7,369	8,177
Goodwill	4,205	3,905
Bank-owned life insurance	38,482	37,515
Other assets	25,168	27,691
Assets from discontinued operations	0	245
Total Assets	2,238,065	2,409,108
Liabilities
Noninterest-bearing demand deposits	264,370	234,673
Interest-bearing deposits:
Demand, savings and money market deposits	881,922	849,828
Time deposits of $100,000 or more	322,964	394,431
Other time deposits	512,997	650,179
Total deposits	1,982,253	2,129,111
Retail repurchase agreements	9,433	8,838
Federal Home Loan Bank advances	58,339	58,370
Junior subordinated debentures	56,702	56,702
Other liabilities	24,465	25,980
Liabilities from discontinued operations	0	1,092
Total Liabilities	2,131,192	2,280,093
Shareholders' Equity
Common stock, no par value; authorized 2,500,000,000 shares, issued 21,588,056 shares in 2012 and 21,102,668 shares in 2011	460,953	455,166
Accumulated deficit	(355,891)	(322,182)
Accumulated other comprehensive income (loss)	1,811	(3,969)
Total Shareholders' Equity	106,873	129,015
Total Liabilities and Shareholders' Equity	2,238,065	2,409,108
Preferred stock Series A [Member]
Shareholders' Equity
Preferred stock	0	0
Preferred stock [Member]
Shareholders' Equity
Preferred stock	$ 0	$ 0

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Loans (Granite Purchased Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable [Line Items]
Allowance of loan losses	$ 30,859	$ 38,551	$ 39,360	$ 44,121	$ 59,366	$ 93,687
Loans held for investment	1,231,795		1,217,535
Granite Corp [Member]
Financing Receivable [Line Items]
Purchased impaired	252,205		330,836	330,836
Purchased contractual	35,097		42,652
Loans held for investment	287,302		373,488
Unpaid principal balance	298,153		404,130
Granite Corp [Member] | Commercial and agricultural [Member]
Financing Receivable [Line Items]
Purchased impaired	16,681		28,872
Purchased contractual	6,425		8,061
Loans held for investment	23,106		36,933
Unpaid principal balance	22,955		39,531
Granite Corp [Member] | Real estate - construction [Member]
Financing Receivable [Line Items]
Purchased impaired	2,764		7,641
Purchased contractual	0		0
Loans held for investment	2,764		7,641
Unpaid principal balance	2,833		8,413
Granite Corp [Member] | Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable [Line Items]
Purchased impaired	42,538		52,894
Purchased contractual	28,672		34,590
Loans held for investment	71,210		87,484
Unpaid principal balance	74,075		93,310
Granite Corp [Member] | Real estate - mortgage, commercial [Member]
Financing Receivable [Line Items]
Purchased impaired	188,824		239,621
Purchased contractual	0		0
Loans held for investment	188,824		239,621
Unpaid principal balance	197,006		261,076
Granite Corp [Member] | Consumer [Member]
Financing Receivable [Line Items]
Purchased impaired	1,398		1,808
Purchased contractual	0		1
Loans held for investment	1,398		1,809
Unpaid principal balance	1,284		1,800
Granite Corp [Member] | PI [Member]
Financing Receivable [Line Items]
Allowance of loan losses	3,300
Granite Corp [Member] | PC [Member]
Financing Receivable [Line Items]
Allowance of loan losses	$ 500

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Consolidated Statements of Shareholders' Equity (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Total	Preferred stock [Member]	Common Stock [Member]	Common Stock Warrant [Member]	Retained Earnings/(Accumulated Deficit) [Member]	Accumulated Other Comprehensive Loss [Member]	2011 Issuance [Member]	2011 Issuance [Member] Common Stock [Member]	2012 Issuance [Member]	2012 Issuance [Member] Common Stock [Member]
Beginning balance at Dec. 31, 2010	$ (28,837)	$ 56,424	$ 143,634	$ 3,891	$ (229,095)	$ (3,691)
Beginning balance, shares at Dec. 31, 2010		7,551,500	114,246
Comprehensive loss:
Net loss	(106,611)				(106,611)
Other comprehensive income, net of tax	500					500
Total comprehensive loss	(106,111)
Issuance of stock, shares		5,000,000
Issuance of stock	5,000	5,000
Accretion of discount on preferred stock	0	571			(571)
Stock option compensation expense recognized	16		16
Ending balance at Sep. 30, 2011	(129,932)	61,995	143,650	3,891	(336,277)	(3,191)
Ending balance, shares at Sep. 30, 2011		12,551,500	114,246
Beginning balance at Dec. 31, 2011	129,015	0	455,166	0	(322,182)	(3,969)
Beginning balance, shares at Dec. 31, 2011		0	21,102,668
Comprehensive loss:
Net loss	(33,709)				(33,709)
Other comprehensive income, net of tax	5,780					5,780
Total comprehensive loss	(27,929)
Issuance of stock, shares										485,788
Issuance of stock									6,696	6,696
Stock option compensation expense recognized	1		1
Expense related to 2011 issuance of common stock							(913)	(913)	(158)
Return of common stock not received for fractional share rounding purposes in the 1:100 reverse stock split, shares			(586)
Exercise of warrants related to stock offering, shares			186
Stock Issued During Period, Value, Warrants Exercised	3		3
Ending balance at Sep. 30, 2012	$ 106,873	$ 0	$ 460,953	$ 0	$ (355,891)	$ 1,811
Ending balance, shares at Sep. 30, 2012		0	21,588,056

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Fair Values of Assets and Liabilities (Measured on Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Continuing operations [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Loans held for sale	$ 8,212	$ 4,529
Continuing operations [Member] | Nonrecurring [Member] | Total [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Loans held for sale		4,529
Impaired loans, net	10,247	31,266
Expected loans		308,594
Contractual loans		65,283
Other real estate owned	56,431	84,794
Total assets at fair value	66,678	494,466
Continuing operations [Member] | Nonrecurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Loans held for sale		4,529
Total assets at fair value		4,529
Continuing operations [Member] | Nonrecurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Impaired loans, net	10,247	31,266
Expected loans		308,594
Contractual loans		65,283
Other real estate owned	56,431	84,794
Total assets at fair value	66,678	489,937
Discontinued operations [Member] | Nonrecurring [Member] | Total [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Loans held for sale		233
Total assets at fair value		233
Discontinued operations [Member] | Nonrecurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Loans held for sale		233
Total assets at fair value		$ 233

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Investment Securities (Maturity Schedule) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available-for-sale Securities, Debt Maturities [Abstract]
Due in one year or less, amortized cost	$ 8,372
Due in one year or less, estimated fair value	8,412
Due after one year through five years, amortized cost	53,301
Due after one year through five years, estimated fair value	53,736
Due after five years through ten years, amortized cost	3,259
Due after five years through ten years, estimated fair value	3,219
Due after ten years, amortized cost	6,648
Due after ten years, estimated fair value	6,922
Total, amortized cost	71,580
Total, estimated fair value	72,289
Mortgage-backed securities, amortized cost	411,399
Mortgage-backed securities, estimated fair value	420,097
Total, amortized cost	482,979
Estimated fair value	$ 492,386	$ 431,306

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation

The following table summarizes the amortized cost and estimated fair value of available-for-sale investment securities and presents the related gross unrealized gains and losses:

September 30, 2012
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Obligations of:
U.S. Treasury and government agencies	$	6,648	$	274	$	—	$	6,922
U.S. government sponsored enterprises	22,128		57		—		22,185
States and political subdivisions	5,952		110		—		6,062
Residential mortgage-backed securities-GSE	359,241		8,666		140		367,767
Residential mortgage-backed securities-Private	23,601		594		473		23,722
Commercial mortgage backed securities-GSE	23,245		3		—		23,248
Commercial mortgage-backed securities-Private	5,312		48		—		5,360
Corporate notes	36,852		308		40		37,120
Total	$	482,979	$	10,060	$	653	$	492,386
December 31, 2011
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Obligations of:
U.S. Treasury and government agencies	$	7,081	$	107	$	—	$	7,188
U.S. government sponsored enterprises	32,479		36		151		32,364
States and political subdivisions	6,075		16		1		6,090
Residential mortgage-backed securities-GSE	348,884		2,611		1,222		350,273
Residential mortgage-backed securities-Private	33,111		73		967		32,217
Corporate notes	3,206		—		32		3,174
Total	$	430,836	$	2,843	$	2,373	$	431,306

Available-for-sale Securities, Continuous Unrealized Loss Position

The following tables show our investments' estimated fair value and gross unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011. All unrealized losses on investment securities are considered by management to be temporary given the credit ratings on these investment securities or the short duration of the unrealized loss or both.

	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
September 30, 2012
Residential mortgage-backed securities-GSE	$	5,599	$	24	$	19,275	$	117	$	24,874	$	141
Residential mortgage-backed securities-Private	7,858		472		—		—		7,858		472
Corporate notes	3,219		40		—		—		3,219		40
Total	$	16,676	$	536	$	19,275	$	117	$	35,951	$	653
	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
December 31, 2011
Obligations of:
U.S. government sponsored enterprises	$	21,248	$	151	$	—	$	—	$	21,248	$	151
States and political subdivisions	1,907		1		—		—		1,907		1
Residential mortgage-backed securities-GSE	89,730		1,042		16,552		180		106,282		1,222
Residential mortgage-backed securities-Private	21,519		967		—		—		21,519		967
Corporate notes	3,173		32		—		—		3,173		32
Total	$	137,577	$	2,193	$	16,552	$	180	$	154,129	$	2,373

Available-for-sale Securities, by Maturity Dates

The aggregate amortized cost and fair value of securities at September 30, 2012, by remaining contractual maturity, are shown in the following table. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

	Available-for-Sale
(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	8,372	$	8,412
Due after one one year through five years	53,301		53,736
Due after five years through 10 years	3,259		3,219
Due after 10 years	6,648		6,922
Total	71,580		72,289
Mortgage-backed securities	411,399		420,097
Total	$	482,979	$	492,386

XML

Loans (Details) (Real estate - mortgage, 1-4 family residential [Member], PC [Member], USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Financing Receivable [Line Items]
Loans purchases		$ 137.4
Loans purchases premium		3.7
Granite Corp [Member]
Financing Receivable [Line Items]
Loans purchases	35.8	35.8
Loans purchases premium	$ 0.3	$ 0.3

XML

Other Real Estate Owned and Property Acquired in Settlement of Loans (Tables)

9 Months Ended

Sep. 30, 2012

Repossessed Assets [Abstract]

Schedule of Repossessed Assets

The following table summarizes OREO and personal property acquired in settlement of loans at the periods indicated:

(dollars in thousands)	September 30, 2012		December 31, 2011
Real estate acquired in settlement of loans	$	80,482	$	110,009
Personal property acquired in settlement of loans	318		377
Total property acquired in settlement of loans	$	80,800	$	110,386

Activities of Real Estate Acquired through Foreclosure

The following tables summarize the changes in real estate acquired in settlement of loans at the periods indicated:

	For Three Months Ended
(dollars in thousands)	September 30, 2012			September 30, 2011
Real estate acquired in settlement of loans, beginning of period	$	86,183		$	101,384
Plus: New real estate acquired in settlement of loans	9,746			27,278
Less: Sales of real estate acquired in settlement of loans	(13,826		)	(29,122		)
Less: Write-downs and net loss on sales charged to expense	(1,621		)	(3,441		)
Real estate acquired in settlement of loans, end of period	$	80,482		$	96,099

	For Nine Months Ended
(dollars in thousands)	September 30, 2012			September 30, 2011
Real estate acquired in settlement of loans, beginning of period	$	110,009		$	62,058
Plus: New real estate acquired in settlement of loans	24,766			101,245
Less: Sales of real estate acquired in settlement of loans	(38,202		)	(39,521		)
Less: Write-downs and net loss on sales charged to expense	(16,091		)	(27,683		)
Real estate acquired in settlement of loans, end of period	$	80,482		$	96,099

XML

Consolidated Statements of Shareholders' Equity (Parenthetical) (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Ratio
Reverse stock split, conversion ratio	0.01
2012 Issuance [Member]
Stock issuance costs	158

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized cost of available-for-sale securities	$ 482,979	$ 430,836
Common stock, no par value
Common stock, shares authorized	2,500,000,000	2,500,000,000
Common stock, shares issued	21,588,056	21,102,668
Preferred stock Series A [Member]
Preferred stock, par value	$ 10	$ 10
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock [Member]
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	15,000,000	15,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

XML

Fair Values of Assets and Liabilities

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Values of Assets and Liabilities

Fair Values of Assets and Liabilities

FNB utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale, derivative assets and liabilities, certain FHLB advances hedged by interest rate swaps designated as fair value hedges, performing mortgage loans held for sale, and mortgage servicing rights are recorded at fair value on a recurring basis. Additionally, from time-to-time, FNB may be required to record at fair value other assets and liabilities on a nonrecurring basis, such as non-performing loans held for sale, loans held for investment, impaired loans and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets or liabilities.

Fair Value Hierarchy

FNB groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Investments Securities Available-for-Sale

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 may include asset-backed securities in less liquid markets.

Liquidity is a significant factor in the determination of the fair values of available-for-sale debt securities. Market price quotes may not be readily available for some positions, or positions within a market sector where trading activity has slowed significantly or ceased. Some of these instruments are valued using a discounted cash flow model, which estimates the fair value of the securities using internal credit risk, interest rate and prepayment risk models that incorporate management's best estimate of current key assumptions such as default rates, loss severity and prepayment rates. Principal and interest cash flows are discounted using an observable discount rate for similar instruments with adjustments that management believes a market participant would consider in determining fair value for the specific security. Underlying assets are valued using external pricing services, where available, or matrix pricing based on the vintages and ratings. Situations of illiquidity generally are triggered by the market's perception of credit uncertainty regarding a single company or a specific market sector. In these instances, fair value is determined based on limited available market information and other factors, principally from reviewing the issuer's financial statements and changes in credit ratings made by one or more ratings agencies.

Loans Held for Sale

At December 31, 2011, loans held for sale included problem commercial loans under contract to be sold. Problem commercial loans are reclassified from loans held for investment to held for sale when they are under contract to be sold, and are carried at the lower of cost or fair value, based on contractual agreements with independent third-party buyers, less estimated costs to sell. At December 31, 2011, FNB classified loans held for sale as nonrecurring Level 2.

Loans Held for Investment

FNB does not record loans held for investment at fair value on a recurring basis. However, from time to time, a loan is considered impaired and the related impairment is charged against the allowance or a specific allowance is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as impaired, management determines the fair value of the loan to quantify impairment, should such exist. The fair value of impaired loans is estimated using one of several methods, including collateral net liquidation value, market value of similar debt, enterprise value, and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of the expected repayments or collateral meet or exceed the recorded investments in such loans. At September 30, 2012 and December 31, 2011, substantially all of the total impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. FNB records impaired loans as nonrecurring Level 3.

Other Real Estate Owned

OREO is adjusted to fair value upon transfer of the loans to OREO. Subsequently, OREO is carried at the lower of carrying value or fair value less estimated costs to sell. Fair value is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral. Given the lack of observable market prices for identical properties, FNB records the OREO as nonrecurring Level 3.

Derivative Assets and Liabilities

Substantially all derivative instruments held or issued by FNB for risk management or customer-initiated activities are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, FNB measures fair value using models that use primarily market observable inputs, such as yield curves and option volatilities, and include the value associated with counterparty credit risk. FNB classifies derivative instruments held or issued for risk management or customer-initiated activities as Level 2.

Mortgage Servicing Rights

The fair value of mortgage serving rights (MSR) is dependent upon a number of assumptions including the fee per loan, the cost to service, the expected loan prepayment rate, and the discount rate.  In determining the fair value of the existing MSR management reviews the key assumptions, analyzes pricing in the market for comparable MSR, and uses a third party provider to independently calculate the fair value of its MSR. FNB records mortgage servicing rights as recurring Level 3.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Assets and liabilities carried at fair value on a recurring basis at September 30, 2012 for continuing operations, including financial instruments that FNB accounts for under the fair value option, are summarized in the following table:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale debt securities:
U.S. Treasury and government agencies	$	6,922	—		$	6,922	—
U.S. government sponsored agencies	22,185		—		22,185		—
States and political subdivisions	6,062		—		6,062		—
Residential mortgage-backed securities-GSE	367,767		—		367,767		—
Residential mortgage-backed securities-Private	23,722		—		23,722		—
Commercial mortgage-backed securities-GSE	23,248				23,248
Commercial mortgage-backed securities-Private	5,360		—		5,360		—
Corporate notes	37,120		—		37,120		—
Total available-for-sale debt securities	492,386		—		492,386		—
Mortgage servicing rights	248		—		—		248
Total assets at fair value from continuing operations	$	492,634	$	—	$	492,386	$	248

Assets and liabilities carried at fair value on a recurring basis at December 31, 2011 for continuing operations, including financial instruments that FNB accounts for under the fair value option, are summarized in the following table:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale debt securities:
U.S. Treasury and government agencies	$	7,188	$	—	$	7,188	$	—
U.S. government sponsored agencies	32,364		—		32,364		—
States and political subdivisions	6,090		—		6,090		—
Residential mortgage-backed securities-GSE	350,273		—		350,273		—
Residential mortgage-backed securities-Private	32,217		—		32,217		—
Corporate notes	3,174		—		3,174		—
Total available-for-sale debt securities	431,306		—		431,306		—
Total assets at fair value from continuing operations	$	431,306	$	—	$	431,306	$	—

The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods indicated:

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Three Months Ended September 30,
	2012		2011
Beginning balance at July 1,	$	25	$	—
Total gains or losses (realized/unrealized):
Included in earnings, net of amortization	223		—
Ending balance at September 30,	$	248	$	—

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Nine Months Ended September 30,
	2012		2011
Beginning balance at January 1,	$	—	$	2,359
Total gains or losses (realized/unrealized):
Included in earnings, net of amortization	248		(117		)
Servicing rights sold	—		(2,242		)
Ending balance at September 30,	$	248	$	—

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

FNB may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. This is due to further deterioration in the value of the assets.

Assets measured at fair value on a nonrecurring basis are included in the following table at September 30, 2012 for continuing operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	10,247	—		—		$	10,247
Other real estate owned	56,431		—		—		56,431
Total assets at fair value from continuing operations	$	66,678	$	—	$	—	$	66,678

Subsequent to their initial recognition at fair value during the quarter ended December 31, 2011, purchased impaired loans and purchased contractual loans are no longer recorded at their fair value and therefore these loans are not included in the above table of assets measured at fair value on a nonrecurring basis at September 30, 2012.

Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2011 for continuing operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Loans held for sale	$	4,529	$	—	$	4,529	$	—
Impaired loans, net	31,266		—		—		31,266
Purchased impaired loans	308,594		—		—		308,594
Purchased contractual loans	65,283		—		—		65,283
Other real estate owned	84,794		—		—		84,794
Total assets at fair value from continuing operations	$	494,466	$	—	$	4,529	$	489,937

There are no assets measured at fair value on a nonrecurring basis at September 30, 2012 for discontinued operations.

Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2011 for discontinued operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Loans held for sale	$	233	$	—	$	233	$	—
Total assets at fair value from discontinued operations	$	233	$	—	$	233	$	—

Quantitative Information about Level 3 Fair Value Measurements

(dollars in thousands)	Fair Value at September 30, 2012		Valuation Techniques	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans, net	$	10,247	Discounted appraisals	Collateral discounts	6.00% - 40.00%
Other real estate owned	56,431		Discounted appraisals	Collateral discounts	6.00% - 40.00%
Mortgage servicing rights	248		Discounted cash flows	Prepayment rate	10.00% - 30.00%
Mortgage servicing rights				Discount rate	6.00% - 12.00%

Level 3 Valuation Methodologies. Following is a description of the unobservable inputs used for Level 3 fair value measurements.

Disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value is required. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time FNB's entire holdings of a particular financial instrument.

Because no market exists for a portion of FNB's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value for each class of FNB's financial instruments.

Cash and cash equivalents. Fair value equals the carrying value of such assets due to their nature and is classified as Level 1.

Investment securities. The fair value of investment securities is based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The fair value of equity investments in the restricted stock of the FRBR and FHLB approximates the carrying value. The fair value of investment securities is classified as Level 2.

Loans held for sale Substantially all residential mortgage loans held for sale are pre-sold and their carrying value approximates fair value. FNB classified the fair value of loans held for sale as Level 2.

Loans held for investment. The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Substantially all residential mortgage loans held for sale are pre-sold and their carrying value approximates fair value. The fair value of variable rate loans with frequent repricing and negligible credit risk approximates book value. The fair value of loans is further discounted by credit and liquidity factors. FNB classified the fair value of loans as Level 3.

Accrued interest receivable and payable. The carrying amounts of accrued interest payable and receivable approximate fair value and are classified as Level 2.

Deposits. The fair value of noninterest-bearing and interest-bearing demand deposits and savings are the amounts payable on demand because these products have no stated maturity. The fair value of time deposits is estimated using the rates currently offered for deposits of similar remaining maturities and are classified as Level 2.

Borrowed funds. The carrying value of retail repurchase agreements and federal funds purchased is considered to be a reasonable estimate of fair value. The fair value of FHLB advances and other borrowed funds is estimated using the rates currently offered for advances of similar remaining maturities and are classified as Level 2.

Junior subordinated debentures. Included in junior subordinated debentures are variable rate trust preferred securities issued by FNB. Fair values for the trust preferred securities were estimated by developing cash flow estimates for each of these debt instruments based on scheduled principal and interest payments and current interest rates. Once the cash flows were determined, a rate for comparable subordinated debt was used to discount the cash flows to the present value. The estimated fair value for FNB's junior subordinated debentures have declined due to wider credit spreads (i.e., spread to LIBOR) on similar trust preferred issues. This is due, in part, to proposed bank regulatory changes in bank capital structure. FNB classified the fair value of junior subordinated debentures as Level 3.

Financial instruments with off-balance sheet risk. The fair value of financial instruments with off-balance sheet risk is considered to approximate carrying value, since the large majority of these future financing commitments would result in loans that have variable rates and/or relatively short terms to maturity. For other commitments, generally of a short-term nature, the carrying value is considered to be a reasonable estimate of fair value.

The estimated fair values of financial instruments for continuing operations are as follows at the periods indicated:

	At September 30, 2012
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets of Continuing Operations:
Cash and cash equivalents	$	327,870	$	327,870	$	327,870	$	—	—
Investment securities: Available-for-sale	492,386		492,386		—		492,386		—
Loans held for sale	8,212		8,212		—		8,212		—
Loans, net	1,200,936		1,192,784		—		—		1,192,784
Accrued interest receivable	7,424		7,424		—		7,424		—
Financial Liabilities of Continuing Operations:
Deposits	1,982,253		1,987,807		—		1,987,807		—
Retail repurchase agreements	9,433		9,433		—		9,433		—
Federal Home Loan Bank advances	58,339		63,649		—		63,649		—
Junior subordinated debentures	56,702		37,068		—		—		37,068
Accrued interest payable	1,969		1,969		—		1,969		—

	At December 31, 2011
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets of Continuing Operations:
Cash and cash equivalents	$	553,416	$	553,416	$	553,416	$	—	$	—
Investment securities: Available-for-sale	431,306		431,306		—		431,306		—
Loans held for sale	4,529		4,529		—		4,529		—
Loans, net	1,178,175		1,176,795		—		—		1,176,795
Accrued interest receivable	5,919		5,919		—		5,919		—
Financial Liabilities of Continuing Operations:
Deposits	2,129,111		2,139,093		—		2,139,093		—
Retail repurchase agreements	8,838		8,838		—		8,838		—
Federal Home Loan Bank advances	58,370		62,555		—		62,555		—
Junior subordinated debentures	56,702		36,218		—		—		36,218
Accrued interest payable	1,654		1,654		—		1,654		—

The estimated fair values of financial instruments for discontinued operations are as follows:

	As of September 30, 2012				As of December 31, 2011
(dollars in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets of Discontinued Operations	$	—	$	—	$	233	$	233
Financial Liabilities of Discontinued Operations	—		—		—		—

There were no transfers between valuation levels for any assets during the quarter ended September 30, 2012 or the quarter ended September 30, 2011. If different valuation techniques are deemed necessary, we would consider those transfers to occur at the end of the period when the assets are valued.

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012
Document Period End Date	Sep. 30, 2012
Current Fiscal Year End Date	--12-31
Entity Registrant Name	FNB United Corp.
Entity Central Index Key	0000764811
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		21,588,056

XML

Capital Raise

9 Months Ended

Sep. 30, 2012

Equity [Abstract]

Capital Raise

Capital Raise

Between May 21, 2012 and June 26, 2012, FNB issued 485,788 shares of common stock at an average price of $15.01 for total proceeds of $7.29 million through its “At The Market” (“ATM”) offering. Net proceeds from the offering of $6.7 million were contributed to CommunityOne. During July 2012, FNB sold a further 176 shares to holders of warrants issued in connection with the Merger, yielding net proceeds of approximately $3,000.

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest Income
Interest and fees on loans	$ 16,264	$ 10,967	$ 50,458	$ 36,250
Taxable income	2,667	2,166	8,238	6,963
Non-taxable income	0	49	0	346
Other interest income	276	173	936	456
Total interest income	19,207	13,355	59,632	44,015
Interest Expense
Deposits	3,320	4,683	11,244	14,814
Retail repurchase agreements	6	11	23	43
Federal Home Loan Bank advances	391	609	1,057	2,010
Other borrowed funds	288	313	877	1,009
Total interest expense	4,005	5,616	13,201	17,876
Net Interest Income before Provision for Loan Losses	15,202	7,739	46,431	26,139
Provision for loan losses	32	7,181	10,877	60,944
Net Interest Income/(Loss) after Provision for Loan Losses	15,170	558	35,554	(34,805)
Noninterest Income [Abstract]
Service charges on deposit accounts	1,883	1,377	5,803	4,306
Mortgage loan income/(loss)	728	(116)	1,051	(10)
Cardholder and merchant services income	1,014	808	3,057	2,416
Trust and investment services	234	221	692	973
Bank owned life insurance	290	262	910	928
Other service charges, commissions and fees	252	198	777	554
Securities (loss)/gains, net	(33)	7,393	1,923	7,308
Loss on fair value swap	0	(182)	0	(13)
Other income	275	119	788	484
Total noninterest income	4,643	10,080	15,001	16,946
Noninterest Expense [Abstract]
Personnel expense	9,717	6,453	30,245	19,178
Net occupancy expense	1,710	1,180	4,866	3,483
Furniture, equipment and data processing expense	2,012	1,561	6,008	4,780
Professional fees	1,336	1,339	3,709	4,218
Stationery, printing and supplies	152	100	446	317
Advertising and marketing	166	170	420	506
Other real estate owned expense	3,602	4,685	21,594	31,458
Credit/debit card expense	432	434	1,279	1,253
FDIC insurance	1,056	1,461	2,879	4,899
Loan collection expense	1,119	1,220	2,379	3,871
Merger-related expense	939	2,207	2,357	2,207
Core deposit intangible amortization	352	199	1,056	596
Other expense	2,009	2,191	7,127	5,512
Total noninterest expense	24,602	23,200	84,365	82,278
Loss from continuing operations, before income taxes	(4,789)	(12,562)	(33,810)	(100,137)
Income tax expense (benefit) - continuing operations	(77)	1,328	(128)	752
Loss from continuing operations, net of tax	(4,712)	(13,890)	(33,682)	(100,889)
Loss from discontinued operations, net of tax	0	(40)	(27)	(5,722)
Net loss	(4,712)	(13,930)	(33,709)	(106,611)
Dividends on preferred stock	0	(1,093)	0	(3,197)
Net loss to common shareholders	$ (4,712)	$ (15,023)	$ (33,709)	$ (109,808)
Weighted average number of common shares outstanding - basic and diluted	21,588,027	114,320	21,294,727	114,277
Net loss per common share from continuing operations - basic and diluted	$ (0.22)	$ (131.06)	$ (1.58)	$ (910.82)
Net loss per common share from discontinued operations - basic and diluted	$ 0.00	$ (0.35)	$ 0.00	$ (50.07)
Net loss per common share - basic and diluted	$ (0.22)	$ (131.41)	$ (1.58)	$ (960.89)

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Investment Securities

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

The primary objective of FNB's management of the investment portfolio is to maintain a portfolio of high quality, highly liquid investments yielding competitive returns. FNB is required under federal regulations to maintain adequate liquidity to ensure safe and sound operations. FNB maintains investment balances based on a continuing assessment of cash flows, the level of loan production, current interest rate risk strategies and an assessment of the potential future direction of market interest rate changes. Investment securities differ in terms of default, interest rate, liquidity and expected rate of return risks.

The following table summarizes the amortized cost and estimated fair value of available-for-sale investment securities and presents the related gross unrealized gains and losses:

September 30, 2012
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Obligations of:
U.S. Treasury and government agencies	$	6,648	$	274	$	—	$	6,922
U.S. government sponsored enterprises	22,128		57		—		22,185
States and political subdivisions	5,952		110		—		6,062
Residential mortgage-backed securities-GSE	359,241		8,666		140		367,767
Residential mortgage-backed securities-Private	23,601		594		473		23,722
Commercial mortgage backed securities-GSE	23,245		3		—		23,248
Commercial mortgage-backed securities-Private	5,312		48		—		5,360
Corporate notes	36,852		308		40		37,120
Total	$	482,979	$	10,060	$	653	$	492,386
December 31, 2011
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Obligations of:
U.S. Treasury and government agencies	$	7,081	$	107	$	—	$	7,188
U.S. government sponsored enterprises	32,479		36		151		32,364
States and political subdivisions	6,075		16		1		6,090
Residential mortgage-backed securities-GSE	348,884		2,611		1,222		350,273
Residential mortgage-backed securities-Private	33,111		73		967		32,217
Corporate notes	3,206		—		32		3,174
Total	$	430,836	$	2,843	$	2,373	$	431,306

CommunityOne and Granite, as members of the Federal Home Loan Bank of Atlanta (“FHLB”), are required to own capital stock in the FHLB based generally upon the balances of total assets and FHLB advances. FHLB capital stock is pledged to secure FHLB advances. This investment is carried at cost since no ready market exists for FHLB stock and there is no quoted market value. However, redemption of this stock has historically been at par value. The combined banks owned a total of $6.3 million of FHLB stock at September 30, 2012 and at December 31, 2011. Due to the redemption provisions of FHLB stock, FNB estimated that fair value approximated cost and that this investment was not impaired at September 30, 2012. FHLB stock is included in other assets at its original cost basis.

CommunityOne, as a member bank of the Federal Reserve Bank of Richmond (“FRBR”), is required to own capital stock of the FRBR based upon a percentage of the bank's common stock and surplus. This investment is carried at cost since no ready market exists for FRBR stock and there is no quoted market value. At both September 30, 2012 and December 31, 2011, CommunityOne owned a total of $3.7 million, of FRBR stock. Due to the nature of this investment in an entity of the U.S. government, FNB estimated that fair value approximated the cost and that this investment was not impaired at September 30, 2012. FRBR stock is included in other assets at its original cost basis.

At September 30, 2012, $93.4 million of the investment securities portfolio was pledged to secure public deposits, $14.5 million was pledged to retail repurchase agreements, $4.0 million was pledged to the FRBR and $2.1 million was pledged to others, leaving $378.4 million available as lendable collateral.

During the three and nine months ended September 30, 2012, the banks sold securities with a book value of $21.4 million and $134.1 million respectively, and recognized a loss of $(33) thousand and a gain of $1.9 million, respectively. The banks sold these securities in order to modify our interest rate sensitivity profile and to eliminate below-investment grade securities. During the three and nine months ended September 30, 2011, the banks sold securities with a book value of $252.7 million and $282.9 million respectively, and recognized a gain of $7.4 million and $7.3 million, respectively.

The following tables show our investments' estimated fair value and gross unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011. All unrealized losses on investment securities are considered by management to be temporary given the credit ratings on these investment securities or the short duration of the unrealized loss or both.

	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
September 30, 2012
Residential mortgage-backed securities-GSE	$	5,599	$	24	$	19,275	$	117	$	24,874	$	141
Residential mortgage-backed securities-Private	7,858		472		—		—		7,858		472
Corporate notes	3,219		40		—		—		3,219		40
Total	$	16,676	$	536	$	19,275	$	117	$	35,951	$	653
	Less than 12 Months				12 Months or More				Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
December 31, 2011
Obligations of:
U.S. government sponsored enterprises	$	21,248	$	151	$	—	$	—	$	21,248	$	151
States and political subdivisions	1,907		1		—		—		1,907		1
Residential mortgage-backed securities-GSE	89,730		1,042		16,552		180		106,282		1,222
Residential mortgage-backed securities-Private	21,519		967		—		—		21,519		967
Corporate notes	3,173		32		—		—		3,173		32
Total	$	137,577	$	2,193	$	16,552	$	180	$	154,129	$	2,373

At September 30, 2012, 7 available-for-sale securities were in an unrealized loss position less than 12 months compared to 32 at December 31, 2011. At September 30, 2012, there were 4 available-for-sale securities that were in an unrealized loss position for longer than 12 months, compared to seven at December 31, 2011.

If an entity intends to sell a debt security or cannot assert it is more likely than not that it will not have to sell the security before recovery, other than temporary impairment ("OTTI") must be taken. If the entity does not intend to sell the debt security before recovery, but the entity does not expect to recover the entire amortized cost basis, then OTTI must be taken, but the amount of impairment is to be bifurcated between impairment due to credit (which is recorded through earnings) and noncredit impairment (which becomes a component of other comprehensive income (“OCI”) for both available-for-sale and held-to-maturity securities). For held-to-maturity securities, the amount in OCI will be amortized prospectively over the security's remaining life. FNB did not have any OTTI during the three and nine months ended September 30, 2012 and September 30, 2011.

FNB analyzed its securities portfolio at September 30, 2012, paying particular attention to its private label mortgage-backed securities. After considering ratings, fair value, cash flows and other factors, FNB does not believe securities to be other-than-temporary impaired.

The aggregate amortized cost and fair value of securities at September 30, 2012, by remaining contractual maturity, are shown in the following table. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

	Available-for-Sale
(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	8,372	$	8,412
Due after one one year through five years	53,301		53,736
Due after five years through 10 years	3,259		3,219
Due after 10 years	6,648		6,922
Total	71,580		72,289
Mortgage-backed securities	411,399		420,097
Total	$	482,979	$	492,386

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

We have accounted for the Merger as a business combination under the acquisition method of accounting. As a result, we have recognized in our financial statements the identifiable net assets acquired and an amount of goodwill (representing the difference between the purchase price and the identifiable net assets). During the measurement period following a business combination, the amount of identifiable net assets recognized is subject to further adjustment to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. GAAP requires that the measurement period cannot exceed one year from the acquisition date.

Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization and are instead tested for impairment no less than annually. Impairment exists when the carrying value of goodwill exceeds its implied fair value. An impairment loss would be recognized in an amount equal to that excess and would be included in noninterest expense in the Consolidated Statements of Operations. None of the goodwill recognized in the Merger is expected to be deductible for income tax purposes.

During the first quarter of 2012, we recognized $0.3 million in additional goodwill from the Merger. This additional amount was due to new valuations received on OREO acquired in the Merger, which were written down to our best estimate of fair value.

Our intangible assets with definite lives are core deposit premiums ("CDP") and mortgage servicing rights ("MSR"). CDPs are amortized over their useful lives to their estimated residual value and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits. MSRs are amortized over the expected lives of the underlying mortgages including prepayment estimates.

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Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loans Receivable, Net [Abstract]

Loan Credit Quality Indicators

The following table presents loans held for investment balances by risk grade as of September 30, 2012:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	60,547	$	3,964	$	8,154	$	4	$	72,669
Real estate - construction	38,622		1,944		20,697		—		61,263
Real estate - mortgage:
1-4 family residential	534,269		17,873		37,844		265		590,251
Commercial	302,943		57,647		102,439		144		463,173
Consumer	43,612		188		374		265		44,439
Total	$	979,993	$	81,616	$	169,508	$	678	$	1,231,795

The following table presents loans held for investment balances by risk grade as of December 31, 2011:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	77,305	$	7,373	$	9,921	$	490	$	95,089
Real estate - construction	53,105		5,797		33,886		18		92,806
Real estate - mortgage:
1-4 family residential	385,022		25,864		42,630		209		453,725
Commercial	351,731		91,364		87,971		317		531,383
Consumer	43,487		279		387		379		44,532
Total	$	910,650	$	130,677	$	174,795	$	1,413	$	1,217,535

Past Due Loans

The following table presents an aging analysis of accruing and nonaccruing loans as of September 30, 2012:

	Past Due
(dollars in thousands)											PI Loans						90 or more
	30-59 Days		60-89 Days		90 or More Days		Total		Current		No credit deterior- ation		Credit deterior-ation		Total Loans		days past due and Accruing
Commercial and agricultural	$	927	$	832	$	2,511	$	4,270	$	51,718	$	1,021	$	15,660	$	72,669	$	671
Real estate - construction	605		1,503		15,842		17,950		40,549		543		2,221		61,263		—
Real estate - mortgage:
1-4 family residential	972		2,772		13,942		17,686		530,027		39,943		2,595		590,251		58
Commercial	3,221		1,872		31,316		36,409		237,940		177,533		11,291		463,173		339
Consumer	174		13		113		300		42,741		1,364		34		44,439		3
Total	$	5,899	$	6,992	$	63,724	$	76,615	$	902,975	$	220,404	$	31,801	$	1,231,795	$	1,071

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 2011:

	Past Due
(dollars in thousands)											PI Loans						90 or more
	30-59 Days		60-89 Days		90 or More Days		Total		Current		No credit deterior- ation		Credit deterior-ation		Total Loans		days past due and Accruing
Commercial and agricultural	$	335	$	425	$	2,755	$	3,515	$	62,702	$	28,872	$	—	$	95,089	$	305
Real estate - construction	1,850		2,206		21,438		25,494		59,671		7,641		—		92,806		1,400
Real estate - mortgage:
1-4 family residential	4,544		2,253		14,125		20,922		379,909		52,894		—		453,725		292
Commercial	2,926		6,645		16,330		25,901		265,861		239,621		—		531,383		1,003
Consumer	740		278		63		1,081		41,643		1,808		—		44,532		—
Total	$	10,395	$	11,807	$	54,711	$	76,913	$	809,786	$	330,836	$	—	$	1,217,535	$	3,000

Schedule of Impaired Loans Receivables

The following table summarizes information relative to impaired loans for the quarters ended on the dates indicated:

	September 30, 2012				December 31, 2011
(dollars in thousands)	Balance		Associated Reserves		Balance		Associated Reserves
Impaired loans, held for sale	$	—	$	—	$	4,529	$	—
Impaired loans, not individually reviewed for impairment	7,274		—		5,127		—
Impaired loans, individually reviewed, with no impairment	72,402		—		53,884		—
Impaired loans, individually reviewed, with impairment	14,769		4,522		42,357		11,090
Total impaired loans, excluding purchased impaired *	$	94,445	$	4,522	$	105,897	$	11,090
Purchased impaired loans with subsequent deterioration	$	31,801	3,296		$	—	—
Purchased impaired loans with no subsequent deterioration	$	220,404	—		$	330,836	—
Total Reserves			$	7,818			$	11,090
Average impaired loans calculated using a simple average	$	98,567			$	112,600

* Included at September 30, 2012 and December 31, 2011 were $3.6 million and $2.9 million, respectively, in restructured and performing loans.

Schedule of Loans, Non Accrual Status

The following table presents loans held for investment on nonaccrual status by loan class for the dates indicated below:

(dollars in thousands)	September 30,		December 31,
	2012		2011
Loans held for investment:
Commercial and agricultural	$	2,476	$	4,636
Real estate - construction	18,506		30,844
Real estate - mortgage:
1-4 family residential	22,073		26,048
Commercial	41,794		36,666
Consumer	223		250
Total nonaccrual loans	$	85,072	$	98,444
Loans more than 90 days delinquent, still on accrual	$	1,071	$	3,000
Total nonperforming loans	$	86,143	$	101,444

The following table presents loans held for sale on nonaccrual status by loan class for the dates indicated below:

(dollars in thousands)	September 30,		December 31,
	2012		2011
Loans held for sale:
Real estate - construction	$	—	$	1,807
Real estate - mortgage:
1-4 family residential	—		517
Commercial	—		2,205
Consumer	—		—
Total	$	—	$	4,529

Impaired Loans

The following table presents individually reviewed impaired loans and purchased impaired loans with subsequent credit deterioration, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of September 30, 2012:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	1,295	$	2,017	$	—
Real estate - construction	14,887		20,816		—
Real estate - mortgage:
1-4 family residential	13,923		16,640		—
Commercial	42,297		50,861		—
Consumer	—		234		—
Total	$	72,402	$	90,568	$	—
With an allowance recorded:
Commercial and agricultural	$	1,272	$	1,280	$	815
Real estate - construction	2,623		2,914		1,158
Real estate - mortgage:
1-4 family residential	6,091		7,272		1,797
Commercial	4,683		4,758		652
Consumer	100		100		100
Total	$	14,769	$	16,324	$	4,522
Total individually evaluated impaired loans
Commercial and agricultural	$	2,567	$	3,297	$	815
Real estate - construction	17,510		23,730		1,158
Real estate - mortgage:
1-4 family residential	20,014		23,912		1,797
Commercial	46,980		55,619		652
Consumer	100		334		100
Total	$	87,171	$	106,892	$	4,522
PI loans with subsequent credit deterioration:
Commercial and agricultural	$	15,660	$	15,685	$	1,774
Real estate - construction	2,221		2,195		135
Real estate - mortgage:
1-4 family residential	2,595		2,879		604
Commercial	11,291		11,829		749
Consumer	34		44		34
Total	$	31,801	$	32,632	$	3,296

The following table presents individually reviewed impaired loans, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of December 31, 2011:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	2,354	$	4,346	$	—
Real estate - construction	16,351		25,714		—
Real estate - mortgage:
1-4 family residential	13,003		19,657		—
Commercial	22,176		26,964		—
Consumer	—		102		—
Total	$	53,884	$	76,783	$	—
With an allowance recorded:
Commercial and agricultural	$	1,536	$	2,047	$	1,506
Real estate - construction	14,109		14,718		4,899
Real estate - mortgage:
1-4 family residential	11,883		12,328		2,140
Commercial	14,659		14,943		2,415
Consumer	170		172		130
Total	$	42,357	$	44,208	$	11,090
Total individually evaluated impaired loans
Commercial and agricultural	$	3,890	$	6,393	$	1,506
Real estate - construction	30,460		40,432		4,899
Real estate - mortgage:
1-4 family residential	24,886		31,985		2,140
Commercial	36,835		41,907		2,415
Consumer	170		274		130
Total	$	96,241	$	120,991	$	11,090

Impaired Loans, Average Recorded Investment and Interest Income

The following summary includes impaired loans individually reviewed as well as impaired loans held for sale. Average recorded investment and interest income recognized on impaired loans, segregated by portfolio segment, is shown in the following table as of September 30, 2012 and September 30, 2011:

	For Three Months Ended				For Three Months Ended
	September 30, 2012				September 30, 2011
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	1,557	$	56	$	2,417	$	—
Real estate - construction	15,484		104		29,789		—
Real estate - mortgage:
1-4 family residential	14,265		81		13,585		—
Commercial	44,480		567		29,453		—
Consumer	162		4		98		—
Total	$	75,948	$	812	$	75,342	$	—
With an allowance recorded:
Commercial and agricultural	$	1,274	$	6	$	2,751	$	—
Real estate - construction	2,802		9		47,884		—
Real estate - mortgage:
1-4 family residential	6,436		41		16,268		—
Commercial	4,689		27		21,647		—
Consumer	100		1		311		—
Total	$	15,301	$	84	$	88,861	$	—
Total:
Commercial and agricultural	$	2,831	$	62	$	5,168	$	—
Real estate - construction	18,286		113		77,673		—
Real estate - mortgage:
1-4 family residential	20,701		122		29,853		—
Commercial	49,169		594		51,100		—
Consumer	262		5		409		—
Total	$	91,249	$	896	$	164,203	$	—

	For Nine Months Ended				For Nine Months Ended
	September 30, 2012				September 30, 2011
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	1,879	$	152	$	3,305	$	—
Real estate - construction	18,140		350		49,617		—
Real estate - mortgage:
1-4 family residential	15,096		292		18,628		1
Commercial	46,051		1,388		49,736		1
Consumer	279		6		196		—
Total	$	81,445	$	2,188	$	121,482	$	2
With an allowance recorded:
Commercial and agricultural	$	1,266	$	36	$	5,803	$	—
Real estate - construction	2,873		32		60,131		—
Real estate - mortgage:
1-4 family residential	6,869		163		16,027		—
Commercial	4,687		145		42,990		1
Consumer	95		2		231		—
Total	$	15,790	$	378	$	125,182	$	1
Total:
Commercial and agricultural	$	3,145	$	188	$	9,108	$	—
Real estate - construction	21,013		382		109,748		—
Real estate - mortgage:
1-4 family residential	21,965		455		34,655		1
Commercial	50,738		1,533		92,726		2
Consumer	374		8		427		—
Total	$	97,235	$	2,566	$	246,664	$	3

Schedule of Loans Receivable, Sold Loans

The following table presents sold loans by portfolio segment for the periods indicated below:

	For Three Months Ended September 30, 2012					For Three Months Ended September 30, 2011
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	9	$	217	$	1,238
Real estate - construction	—	—		—		8	6,406		4,927
Real estate - mortgage:
1-4 family residential						—	—		—
Commercial	1	602		540		5	6,723		4,839
Consumer	—	—		—		1	96		190
Total	1	$	602	$	540	23	$	13,442	$	11,194

	For Nine Months Ended September 30, 2012					For Nine Months Ended September 30, 2011
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	14	$	3,505	$	3,190
Real estate - construction	—	—		—		13	16,723		11,899
Real estate - mortgage:
1-4 family residential	7	1,865		1,896		1	1,335		900
Commercial	2	4,402		4,590		8	12,071		10,186
Consumer	—	—		—		1	96		190
Total	9	$	6,267	$	6,486	37	$	33,730	$	26,365

Schedule of Loans Recievable, Acquired Loans

The following table presents the balance of all Granite Purchased Loans:

	At September 30, 2012
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	16,681	$	6,425	$	23,106	$	22,955
Real estate - construction	2,764		—		2,764		2,833
Real estate - mortgage:
1-4 family residential	42,538		28,672		71,210		74,075
Commercial	188,824		—		188,824		197,006
Consumer	1,398		—		1,398		1,284
Total	$	252,205	$	35,097	$	287,302	$	298,153

	At December 31, 2011
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	28,872	$	8,061	$	36,933	$	39,531
Real estate - construction	7,641		—		7,641		8,413
Real estate - mortgage:
1-4 family residential	52,894		34,590		87,484		93,310
Commercial	239,621		—		239,621		261,076
Consumer	1,808		1		1,809		1,800
Total	$	330,836	$	42,652	$	373,488	$	404,130

Deteriorated Loans Acquired, Accretable Yield Movement Schedule

The tables below include only those Granite Purchased Loans accounted for under the expected cash flow method (PI Loans) for the periods indicated. These tables do not include PC Loans, including Granite Purchased PC Loans or purchased performing residential mortgage loans.

	For Nine Months Ended September 30, 2012						For Nine Months Ended December 31, 2011
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	330,836		$	47,804		$	—		$	—
Addition from Bank of Granite Corp acquisition	—			—			351,121			52,581
Accretion	15,831			(15,831		)	4,777			(4,777		)
Increase in future accretion	—			4,592			—			—
Payments received	(84,944		)	—			(24,467		)	—
Foreclosed and transferred to OREO	(9,518		)	—			(595		)	—
Subtotal before allowance	252,205			36,565			330,836			47,804
Allowance for credit losses	(3,296		)	—			—			—
Net carrying amount, end of period	$	248,909		$	36,565		$	330,836		$	47,804

Allowance for Loan Losses

An analysis of the changes in the ALL is as follows:

	For Three Months Ended						For Nine Months Ended
(dollars in thousands)	September 30,						September 30,
	2012			2011			2012			2011
Balance, beginning of period	$	38,551		$	59,366		$	39,360		$	93,687
Provision for losses charged to continuing operations	32			7,181			10,877			60,944
Net charge-offs:
Charge-offs	(9,276		)	(24,376		)	(23,580		)	(115,948		)
Recoveries	1,552			1,950			4,202			5,438
Net charge-offs	(7,724		)	(22,426		)	(19,378		)	(110,510		)
Balance, end of period	$	30,859		$	44,121		$	30,859		$	44,121
Annualized net charge-offs during the period to average loans	2.46		%	9.07		%	2.06		%	13.09		%
Annualized net charge-offs during the period to ALL	100.12		%	201.66		%	83.73		%	334.88		%
Allowance for loan losses to loans held for investment (1)	2.51		%	4.95		%	2.51		%	4.95		%

(1) Excludes discontinued operations.

Allowance for Loan Losses by Portfolio Segment

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2012:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at July 1, 2012	$	7,151		$	11,320		$	8,784		$	9,218		$	2,078		$	38,551
Charge-offs	(1,156		)	(2,465		)	(1,646		)	(2,602		)	(1,407		)	(9,276		)
Recoveries	286			323			69			388			486			1,552
Provision	(1,128		)	(3,195		)	2,787			54			1,514			32
Ending balance at September 30, 2012	$	5,153		$	5,983		$	9,994		$	7,058		$	2,671		$	30,859

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2011:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at July 1, 2011	$	6,527		$	28,419		$	9,030		$	13,619		$	1,771		$	59,366
Charge-offs	(1,988		)	(13,740		)	(1,958		)	(5,848		)	(842		)	(24,376		)
Recoveries	226			1,217			59			96			352			1,950
Provision	204			4,606			(134		)	2,259			246			7,181
Ending balance at September 30, 2011	$	4,969		$	20,502		$	6,997		$	10,126		$	1,527		$	44,121

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2012:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2012	$	5,776		$	11,995		$	8,885		$	11,063		$	1,641		$	39,360
Charge-offs	(2,774		)	(8,761		)	(4,805		)	(3,594		)	(3,646		)	(23,580		)
Recoveries	777			1,169			447			725			1,084			4,202
Provision	1,374			1,580			5,467			(1,136		)	3,592			10,877
Ending balance at September 30, 2012	$	5,153		$	5,983		$	9,994		$	7,058		$	2,671		$	30,859

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2011:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2011	$	11,144		$	46,792		$	7,742		$	26,851		$	1,158		$	93,687
Charge-offs	(10,455		)	(57,912		)	(8,579		)	(36,028		)	(2,974		)	(115,948		)
Recoveries	759			2,121			621			838			1,099			5,438
Provision	3,521			29,501			7,213			18,465			2,244			60,944
Ending balance at September 30, 2011	$	4,969		$	20,502		$	6,997		$	10,126		$	1,527		$	44,121

Allowance for Loan Losses, Impairment Methodology

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment methodology at September 30, 2012:

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	815	$	1,158	$	1,797	$	652	$	100	$	4,522
Collectively evaluated for impairment	2,564		4,690		7,593		5,657		2,537		23,041
PI loans evaluated for credit impairment	1,774		135		604		749		34		3,296
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL evaluated for impairment	$	5,153	$	5,983	$	9,994	$	7,058	$	2,671	$	30,859
Loans held for investment
Individually evaluated for impairment	$	2,567	$	17,510	$	20,014	$	46,980	$	100	$	87,171
Collectively evaluated for impairment	53,421		40,989		527,699		227,369		42,941		892,419
PI loans with subsequent credit deterioration	15,660		2,221		2,595		11,291		34		31,801
PI loans with no credit deterioration	1,021		543		39,943		177,533		1,364		220,404
Total loans evaluated for impairment	$	72,669	$	61,263	$	590,251	$	463,173	$	44,439	$	1,231,795

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment methodology at December 31, 2011:

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	1,506	$	4,899	$	2,140	$	2,415	$	130	$	11,090
Collectively evaluated for impairment	4,270		7,096		6,745		8,648		1,511		28,270
PI loans evaluated for credit impairment	—		—		—		—		—		—
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL evaluated for impairment	$	5,776	$	11,995	$	8,885	$	11,063	$	1,641	$	39,360
Loans held for investment
Individually evaluated for impairment	$	3,890	$	30,460	$	24,886	$	36,835	$	170	$	96,241
Collectively evaluated for impairment	62,327		54,705		375,945		254,927		42,554		790,458
PI loans with subsequent credit deterioration	—		—		—		—		—		—
PI loans with no credit deterioration	28,872		7,641		52,894		239,621		1,808		330,836
Total loans evaluated for impairment	$	95,089	$	92,806	$	453,725	$	531,383	$	44,532	$	1,217,535

Troubled Debt Restructurings on Loans

The following table presents a breakdown of troubled debt restructurings that were restructured during the three months ended September 30, 2012, segregated by portfolio segment:

	For Three Months Ended September 30, 2012					For Three Months Ended September 30, 2011
		Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
		Outstanding		Outstanding				Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number		Recorded		Recorded
	of Loans	Investment		Investment		of Loans		Investment		Investment
Commercial and agricultural	—	$	—	$	—	$	—	$	—	$	—
Real estate - construction	—	—		—		—		—		—
Real estate - mortgage:
1-4 family residential	1	202		202		1		155		155
Commercial	—	—		—		2		1,651		1,651
Consumer	—	—		—		—		—		—
Total	1	$	202	$	202	$	3	$	1,806	$	1,806

The following table presents a breakdown of troubled debt restructurings that were restructured during the nine months ended September 30, 2012, segregated by portfolio segment:

	For Nine Months Ended September 30, 2012					For Nine Months Ended September 30, 2011
		Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
		Outstanding		Outstanding				Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number		Recorded		Recorded
	of Loans	Investment		Investment		of Loans		Investment		Investment
Commercial and agricultural	—	$	—	$	—	$	6	$	555	$	555
Real estate - construction	9	2,526		1,603		6		3,612		3,612
Real estate - mortgage:
1-4 family residential	3	260		260		8		401		401
Commercial	8	1,356		1,353		13		7,904		7,904
Consumer	—	—		—		—		—		—
Total	20	$	4,142	$	3,216	$	33	$	12,472	$	12,472

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Termination of Retirement Plan

9 Months Ended

Sep. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Termination of Retirement Plans

FNB elected to terminate the remaining supplemental executive retirement plans (SERP), that were frozen in prior years, by settling the remaining payments via lump sum payments that will be paid in October 2013.  The gain on termination recognized of $0.4 million is recorded in other comprehensive income. As the cash payments are made the gain will be recognized in current earnings.

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Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share, Diluted, Other Disclosures [Abstract]

Earnings Per Share

Earnings Per Share

Basic net loss per share, or basic earnings/(loss) per share (“EPS”), is computed by dividing net loss to common shareholders by the weighted average number of common shares outstanding for the period. FNB retired its preferred stock in 2011 and there were no unpaid preferred dividends or accretion of preferred stock discount at September 30, 2012. At September 30, 2011, FNB had $4.2 million of unpaid cumulative dividends on its Series A preferred stock and had $0.6 million in accretion of the discount on the preferred stock.

Diluted EPS reflects the potential dilution that could occur if FNB's potential common stock, which consists of dilutive stock options and a common stock warrant, were issued. As required for entities with complex capital structures, a dual presentation of basic and diluted EPS is included on the face of the income statement, and a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation is provided in this note.

(dollars in thousands, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net loss from continuing operations before cumulative dividends on preferred stock	$	(4,712	)	$	(13,890	)	$	(33,682	)	$	(100,889	)
Dividends on preferred stock	—			(1,093		)	—			(3,197		)
Loss from continuing operations, net of tax	(4,712		)	(14,983		)	(33,682		)	(104,086		)
Loss from discontinued operations, net of tax	—			(40		)	(27		)	(5,722		)
Net loss to common shareholders	$	(4,712	)	$	(15,023	)	$	(33,709	)	$	(109,808	)
Weighted average number of common shares outstanding - basic and diluted	21,588,027			114,320			21,294,727			114,277
Net loss per common share from continuing operations - basic and diluted	$	(0.22	)	$	(131.06	)	$	(1.58	)	$	(910.82	)
Net loss per common share from discontinued operations - basic and diluted	—			(0.35		)	—			(50.07		)
Net loss per common share - basic and diluted	(0.22		)	(131.41		)	(1.58		)	(960.89		)

As a result of the net loss for the three and nine months ended September 30, 2012 and 2011, all stock options and the common stock warrant were considered antidilutive and thus are not included in this calculation. For the three and nine months ended September 30, 2012 there were 23,347 and 23,552 antidilutive shares, respectively. For the three and nine months ended September 30, 2011, there were 26,821 and 27,218 antidilutive shares, respectively. Of the antidilutive shares, the number of shares relating to stock options were 1,275 and 1,480 for the three months and nine months ended September 30, 2012, respectively, and 4,750 for the three months and nine months ended September 30, 2011.

Net loss to common shareholders increased for the three months ended September 30, 2011 by $1.1 million, and for the nine months ended September 30, 2011 by $3.2 million for preferred stock dividends. Accretion on the preferred stock discount associated with the preferred stock of $0.2 million and $0.6 million was recognized for the three and nine months ended September 30, 2011, respectively. FNB retired its preferred stock in 2011 and there were no preferred stock dividends or accretion on the preferred stock discount for the three and nine months ended September 30, 2012.

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Fair Values of Assets and Liabilities (Quantitative Information about Level 3 Fair Value Measurements) (Details) (Level 3 [Member], Nonrecurring [Member], USD $) In Thousands, unless otherwise specified			9 Months Ended
	Sep. 30, 2012 Discounted Appraisal [Member]	Sep. 30, 2012 Discounted Cash Flows [Member]	Sep. 30, 2012 Impaired loans [Member] Discounted Appraisal [Member] Lower range [Member]	Sep. 30, 2012 Impaired loans [Member] Discounted Appraisal [Member] Upper range [Member]	Sep. 30, 2012 Other real estate owned [Member] Discounted Appraisal [Member] Lower range [Member]	Sep. 30, 2012 Other real estate owned [Member] Discounted Appraisal [Member] Upper range [Member]	Sep. 30, 2012 Mortgage servicing rights [Member] Discounted Cash Flows [Member] Lower range [Member]	Sep. 30, 2012 Mortgage servicing rights [Member] Discounted Cash Flows [Member] Upper range [Member]	Sep. 30, 2012 Continuing operations [Member]	Dec. 31, 2011 Continuing operations [Member]
Fair Value Inputs, Quantitative Information [Line Items]
Impaired loans, net	$ 10,247								$ 10,247	$ 31,266
Other real estate owned	56,431								56,431	84,794
Mortgage servicing rights		$ 248
Collateral discounts			6.00%	40.00%	6.00%	40.00%
Prepayment rate							10.00%	30.00%
Discount rate							4.00%	12.00%

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Loans

9 Months Ended

Sep. 30, 2012

Loans Receivable, Net [Abstract]

Loans

Loans and Allowance for Loan Losses

General

Loans held for investment are stated at the principal amounts outstanding adjusted for purchase premiums/discounts, deferred net loan fees and costs, and unearned income.  FNB reports its loan portfolio by segment and classes, which are disaggregations of portfolio segments.  FNB's portfolio segments are:  Commercial and agricultural, Real estate, and Consumer loans.  The Commercial and agricultural loan and Consumer loan portfolios are not further segregated into classes.  The classes within the Real estate portfolio segment include Real estate - construction and Real estate mortgage, broken into 1-4 family residential mortgage and Commercial real estate mortgage loans.

Loan fees and the incremental direct costs associated with originating loans are deferred and subsequently recognized over the life of the loan as an adjustment to interest income.

In addition to originating loans we also purchase loans. At acquisition purchased loans are designated as either purchased contractual loans ("PC loans") or purchased impaired loans ("PI loans"). PC loans are acquired loans where management believes it is probable that it will receive all principal as of the date of acquisition.  These loans are accounted for under the contractual cash flow method, under ASC 310-20. Any discount or premium paid on PC loans is recorded in interest income using the effective yield method over the expected life of the loans.

PI loans are acquired loans where management believes, at acquisition date, it is probable that all principal on the acquired loans will not be received.  PI loans are placed in homogeneous risk based pools where accounting for projected cash flows is performed, as allowed under ASC 310-30.  Once a pool is established the individual loans within each pool do not change.  As management obtains new information related to changes in expected principal loss and expected cash flows, by pool, we record either an increase in yield when new expected cash flows increase, an allowance for loan losses when new expected cash flows decline, or a decrease in yield when there is only a timing difference in expected cash flows.  

Loans acquired in the Merger ("Granite Purchased Loans") included PI loans and PC loans. Loans designated as PC loans included performing revolving consumer and performing revolving commercial loans on acquisition date.

During the nine months ended September 30, 2012, CommunityOne purchased $137.4 million of performing residential mortgage loans, including premiums of $3.7 million. During the three and nine months ended September 30, 2012, Granite purchased $35.8 million of performing residential mortgage loans, including a premium of $0.3 million, These loan purchases are accounted for as PC loans.

ALL Methodology

FNB's Allowance for Loan Losses ("ALL"), which is utilized to absorb actual losses in the loan portfolio, is maintained at a level consistent with management's best estimate of probable loan losses to be incurred as of the balance sheet date. Management assesses FNB's ALL quarterly. This assessment includes a methodology that separates the total loan portfolio into homogeneous loan classifications for purposes of evaluating risk. The required allowance is calculated by applying a risk adjusted reserve requirement to the dollar volume of loans within a homogenous group. For purposes of the ALL, FNB has grouped its loans into pools according to the loan segmentation regime employed on schedule RC-C of the FFIEC's Consolidated Report of Condition and Income. Major loan portfolio subgroups include: risk graded commercial loans, mortgage loans, home equity loans, retail loans and retail credit lines. Management also analyzes the loan portfolio on an ongoing basis to evaluate current risk levels, and risk grades are adjusted accordingly. While management uses the best information available to make evaluations, future adjustments may be necessary, if economic or other conditions differ substantially from the assumptions used.

As of September 30, 2012, FNB has elected to change the method it uses to calculate the historical loss rates and qualitative and environmental factors in its ALL. FNB had previously calculated the ALL using historical loss factors based on the risk-graded pool to which the loss was assigned at quarter-end four quarters prior to the loss. Historical loss rates are now calculated by associating losses to the risk-graded pool to which they relate for each of the previous eight quarters. Then, using a 24-quarter look back period, loss factors are calculated for each risk-graded pool.

In addition to FNB's ability to use its own historical loss data and migration between risk grades, it has also set up a more rigorous process for computing the qualitative factors that impact the ALL. A committee, independent of the historical loss migration team, reviews risk factors that may impact the ALL. Some factors are statistically quantifiable, such as concentration, growth, delinquency, and nonaccrual risk by loan type, while other factors are qualitative in nature, such as staff competency, competition within our markets, economic and regulatory changes impacting the loans held for investment.

The impact of the change in methodology to the third quarter earnings and to the ALL was to reduce the provision for loan losses and the ALL by an immaterial amount.

FNB lends primarily in North Carolina. As of September 30, 2012, a substantial majority of the principal amount of the loans held for investment in its portfolio was to businesses and individuals in North Carolina. This geographic concentration subjects the loan portfolio to the general economic conditions within this area. The risks created by this concentration have been considered by management in the determination of the adequacy of the ALL. Management believes the ALL is adequate to cover estimated losses on loans at each balance sheet date.

During the three month period ended September 30, 2012, FNB charged off $9.3 million in loans and realized $1.6 million in recoveries, for $7.7 million of net charge-offs. The majority of the loans charged off were loans that had been in impairment status and had specific reserves assigned in prior periods.

The ALL, as a percentage of loans held for investment, was 2.51% at September 30, 2012, compared to 4.95% at September 30, 2011. At December 31, 2011, the ALL, as a percentage of loans held for investment, was 3.23%.

Risk Grades

The risk-grade categories presented in the following table, which are standard categories used by the bank regulators, are:

Pass - Loans categorized as Pass are higher quality loans that have adequate sources of repayment and little risk of collection.

Special Mention - A Special Mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that FNB will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of Substandard loans, does not have to exist in individual assets classified Substandard.

Doubtful - A loan classified as Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors, which may work to the advantage of strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

Loans categorized as Special Mention or worse are considered Criticized. Loans categorized as Substandard or Doubtful are considered Classified. Purchased loans acquired in the Merger are recorded at estimated fair value on the date of acquisition without the carryover of related ALL. The table below includes $70.0 million and $63.6 million in Granite Purchased Loans categorized as Substandard or Doubtful at September 30, 2012 and December 31, 2011, respectively.

The following table presents loans held for investment balances by risk grade as of September 30, 2012:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	60,547	$	3,964	$	8,154	$	4	$	72,669
Real estate - construction	38,622		1,944		20,697		—		61,263
Real estate - mortgage:
1-4 family residential	534,269		17,873		37,844		265		590,251
Commercial	302,943		57,647		102,439		144		463,173
Consumer	43,612		188		374		265		44,439
Total	$	979,993	$	81,616	$	169,508	$	678	$	1,231,795

The following table presents loans held for investment balances by risk grade as of December 31, 2011:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	77,305	$	7,373	$	9,921	$	490	$	95,089
Real estate - construction	53,105		5,797		33,886		18		92,806
Real estate - mortgage:
1-4 family residential	385,022		25,864		42,630		209		453,725
Commercial	351,731		91,364		87,971		317		531,383
Consumer	43,487		279		387		379		44,532
Total	$	910,650	$	130,677	$	174,795	$	1,413	$	1,217,535

Loans included in the preceding loan composition table are net of participations sold. Loans are increased by net loan premiums and deferred loan discounts or fees of $2.6 million at September 30, 2012. Loans are decreased by net deferred loan discounts or fees of $1.8 million at December 31, 2011.

At September 30, 2012 loans held for sale consisted of originated residential mortgage loans held for sale at the lower of cost or fair market value. At December 31, 2011, loans held for sale consisted of nonperforming loans transferred from loans held for investment under sales contracts recorded at the contractual sales price.

Loans serviced for others are not included in the consolidated balance sheet. The unpaid principal balance of loans serviced for others amounted to $33.6 million at September 30, 2012 and $2.0 million at December 31, 2011.

Loans Pledged

To borrow from the FHLB, members must pledge collateral to secure advances and letters of credit. Acceptable collateral includes, among other types of collateral, a variety of residential, multifamily, home equity lines and second mortgages, and commercial loans. Gross loans of $293.1 million and $339.4 million were pledged to collateralize FHLB advances and letters of credit at September 30, 2012 and December 31, 2011, respectively, of which there was $23.9 million and $69.5 million of credit availability for borrowing, respectively. At September 30, 2012, $40.9 million of loans and $4.0 million of securities were pledged to collateralize potential borrowings from the Federal Reserve Discount Window, of which $26.2 million was available as borrowing capacity.

Nonaccruing and Impaired Loans

Interest income on loans is calculated by using the interest method based on the daily outstanding balance. The recognition of interest income is discontinued when, in management's opinion, the collection of all or a portion of interest becomes doubtful. Loans are returned to accrual status when the factors indicating doubtful collectability cease to exist and the loan has performed in accordance with its terms for a demonstrated period of time. The past due status of loans is based on the contractual payment terms. Had nonaccruing loans been on accruing status, interest income would have been higher by $1.5 million and $3.5 million for the three months ended September 30, 2012 and September 30, 2011, respectively, and higher by $2.9 million and $7.6 million for the nine months ended September 30, 2012 and September 30, 2011, respectively. At September 30, 2012 and December 31, 2011, FNB had certain impaired loans of $85.1 million and $103.0 million, respectively, which were on nonaccruing interest status.

All loan classes are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date. When FNB cannot reasonably expect full and timely repayment of its loan, the loan is placed on nonaccrual.

All loan classes on which principal or interest is in default for 90 days or more are put on nonaccrual status, unless there is sufficient documentation to conclude that the loan is well secured and in the process of collection. A debt is "well-secured" if collateralized by liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt in full; or by the guarantee of a financially responsible party. A debt is "in process of collection" if collection is proceeding in due course either through legal action, including judgment enforcement procedures, or, in appropriate circumstances, through collection efforts not involving legal action that are reasonably expected to result in repayment of the debt or its restoration to a current status.

Loans that are less than 90 days delinquent may also be placed on nonaccrual if deterioration in the financial condition of the borrower has increased the probability of less than full repayment.

At the time a loan is placed on nonaccrual, all accrued, unpaid interest is charged off, unless it is documented that repayment of all principal and presently accrued but unpaid interest is probable. Charge-offs of accrued and unpaid interest are charged against the current year's interest income and not against the current ALL.

For all loan classes, a nonaccrual loan may be returned to accrual status when FNB can reasonably expect continued timely payments until payment in full. All prior arrearage does not have to be eliminated, nor do all previously charged-off amounts need to have been recovered, but the loan can still be returned to accrual status if the following conditions are met: (1) all principal and interest amounts contractually due (including arrearage) are reasonably assured of repayment within a reasonable period; and (2) there is a sustained period of repayment performance (generally a minimum of six months) by the borrower, in accordance with the contractual terms involving payments of cash or cash equivalents.

For all classes within all loan portfolios, cash receipts received on nonaccrual loans are applied entirely against principal until the loan or lease has been collected in full, after which time any additional cash receipts are recognized as interest income.

For all loan classes, as soon as any loan becomes uncollectible, the loan will be charged down or charged off as follows:

• If unsecured, the loan must be charged off in full.

• If secured, the outstanding principal balance of the loan should be charged down to the net liquidation value of the collateral.

Loans should be considered uncollectible when:

• No regularly scheduled payment has been made within four months and the determination is made that any further payment is unlikely, or

• The loan is unsecured, the borrower has filed for bankruptcy protection and there is no other (guarantor, etc.) support from an entity outside of the bankruptcy proceedings.

Based on a variety of credit, collateral and documentation issues, loans with lesser degrees of delinquency or obvious loss may also be deemed uncollectible.

The following table presents an aging analysis of accruing and nonaccruing loans as of September 30, 2012:

	Past Due
(dollars in thousands)											PI Loans						90 or more
	30-59 Days		60-89 Days		90 or More Days		Total		Current		No credit deterior- ation		Credit deterior-ation		Total Loans		days past due and Accruing
Commercial and agricultural	$	927	$	832	$	2,511	$	4,270	$	51,718	$	1,021	$	15,660	$	72,669	$	671
Real estate - construction	605		1,503		15,842		17,950		40,549		543		2,221		61,263		—
Real estate - mortgage:
1-4 family residential	972		2,772		13,942		17,686		530,027		39,943		2,595		590,251		58
Commercial	3,221		1,872		31,316		36,409		237,940		177,533		11,291		463,173		339
Consumer	174		13		113		300		42,741		1,364		34		44,439		3
Total	$	5,899	$	6,992	$	63,724	$	76,615	$	902,975	$	220,404	$	31,801	$	1,231,795	$	1,071

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 2011:

	Past Due
(dollars in thousands)											PI Loans						90 or more
	30-59 Days		60-89 Days		90 or More Days		Total		Current		No credit deterior- ation		Credit deterior-ation		Total Loans		days past due and Accruing
Commercial and agricultural	$	335	$	425	$	2,755	$	3,515	$	62,702	$	28,872	$	—	$	95,089	$	305
Real estate - construction	1,850		2,206		21,438		25,494		59,671		7,641		—		92,806		1,400
Real estate - mortgage:
1-4 family residential	4,544		2,253		14,125		20,922		379,909		52,894		—		453,725		292
Commercial	2,926		6,645		16,330		25,901		265,861		239,621		—		531,383		1,003
Consumer	740		278		63		1,081		41,643		1,808		—		44,532		—
Total	$	10,395	$	11,807	$	54,711	$	76,913	$	809,786	$	330,836	$	—	$	1,217,535	$	3,000

A loan is considered impaired, based on current information and events, if it is probable that FNB will be unable to collect the scheduled payments or principal and interest when due according to the contractual terms of the loan agreement.If the loan has been modified to provide relief to the borrower, the loan is deemed to be impaired if all principal and interest will not be repaid according to the original contract. All loans meeting the definition of Doubtful should be considered impaired.

When a loan has been determined to be impaired, the amount of the impairment is measured using the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, the observable market price of the loan, or the fair value of the collateral if the loan is collateral dependent. When the present value of expected future cash flows is used, the effective interest rate is the original contractual interest rate of the loan adjusted for any premium or discount. When the contractual interest rate is variable, the effective interest rate of the loan changes over time. A specific reserve is established as a component of the ALL when a loan has been determined to be impaired. Subsequent to the initial measurement of impairment, if there is a significant change to the impaired loan's expected future cash flows, or if actual cash flows are significantly different from the cash flows previously estimated, FNB recalculates the impairment and appropriately adjusts the specific reserve. Similarly, if FNB measures impairment based on the observable market price of an impaired loan or the fair value of the collateral of an impaired collateral-dependent loan, FNB will adjust the specific reserve if there is a significant change in either of those bases.

When a loan is impaired and principal and interest is in doubt when contractually due, interest income is not recognized. Cash receipts received on nonaccruing impaired loans within any class are generally applied entirely against principal until the loan has been collected in full, after which time any additional cash receipts are recognized as interest income. Cash receipts received on accruing impaired loans within any class are applied in the same manner as accruing loans that are not considered impaired.

The following table summarizes information relative to impaired loans for the quarters ended on the dates indicated:

	September 30, 2012				December 31, 2011
(dollars in thousands)	Balance		Associated Reserves		Balance		Associated Reserves
Impaired loans, held for sale	$	—	$	—	$	4,529	$	—
Impaired loans, not individually reviewed for impairment	7,274		—		5,127		—
Impaired loans, individually reviewed, with no impairment	72,402		—		53,884		—
Impaired loans, individually reviewed, with impairment	14,769		4,522		42,357		11,090
Total impaired loans, excluding purchased impaired *	$	94,445	$	4,522	$	105,897	$	11,090
Purchased impaired loans with subsequent deterioration	$	31,801	3,296		$	—	—
Purchased impaired loans with no subsequent deterioration	$	220,404	—		$	330,836	—
Total Reserves			$	7,818			$	11,090
Average impaired loans calculated using a simple average	$	98,567			$	112,600

* Included at September 30, 2012 and December 31, 2011 were $3.6 million and $2.9 million, respectively, in restructured and performing loans.

The following table presents loans held for investment on nonaccrual status by loan class for the dates indicated below:

(dollars in thousands)	September 30,		December 31,
	2012		2011
Loans held for investment:
Commercial and agricultural	$	2,476	$	4,636
Real estate - construction	18,506		30,844
Real estate - mortgage:
1-4 family residential	22,073		26,048
Commercial	41,794		36,666
Consumer	223		250
Total nonaccrual loans	$	85,072	$	98,444
Loans more than 90 days delinquent, still on accrual	$	1,071	$	3,000
Total nonperforming loans	$	86,143	$	101,444

The following table presents loans held for sale on nonaccrual status by loan class for the dates indicated below:

(dollars in thousands)	September 30,		December 31,
	2012		2011
Loans held for sale:
Real estate - construction	$	—	$	1,807
Real estate - mortgage:
1-4 family residential	—		517
Commercial	—		2,205
Consumer	—		—
Total	$	—	$	4,529

The following table presents individually reviewed impaired loans and purchased impaired loans with subsequent credit deterioration, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of September 30, 2012:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	1,295	$	2,017	$	—
Real estate - construction	14,887		20,816		—
Real estate - mortgage:
1-4 family residential	13,923		16,640		—
Commercial	42,297		50,861		—
Consumer	—		234		—
Total	$	72,402	$	90,568	$	—
With an allowance recorded:
Commercial and agricultural	$	1,272	$	1,280	$	815
Real estate - construction	2,623		2,914		1,158
Real estate - mortgage:
1-4 family residential	6,091		7,272		1,797
Commercial	4,683		4,758		652
Consumer	100		100		100
Total	$	14,769	$	16,324	$	4,522
Total individually evaluated impaired loans
Commercial and agricultural	$	2,567	$	3,297	$	815
Real estate - construction	17,510		23,730		1,158
Real estate - mortgage:
1-4 family residential	20,014		23,912		1,797
Commercial	46,980		55,619		652
Consumer	100		334		100
Total	$	87,171	$	106,892	$	4,522
PI loans with subsequent credit deterioration:
Commercial and agricultural	$	15,660	$	15,685	$	1,774
Real estate - construction	2,221		2,195		135
Real estate - mortgage:
1-4 family residential	2,595		2,879		604
Commercial	11,291		11,829		749
Consumer	34		44		34
Total	$	31,801	$	32,632	$	3,296

The following table presents individually reviewed impaired loans, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of December 31, 2011:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	2,354	$	4,346	$	—
Real estate - construction	16,351		25,714		—
Real estate - mortgage:
1-4 family residential	13,003		19,657		—
Commercial	22,176		26,964		—
Consumer	—		102		—
Total	$	53,884	$	76,783	$	—
With an allowance recorded:
Commercial and agricultural	$	1,536	$	2,047	$	1,506
Real estate - construction	14,109		14,718		4,899
Real estate - mortgage:
1-4 family residential	11,883		12,328		2,140
Commercial	14,659		14,943		2,415
Consumer	170		172		130
Total	$	42,357	$	44,208	$	11,090
Total individually evaluated impaired loans
Commercial and agricultural	$	3,890	$	6,393	$	1,506
Real estate - construction	30,460		40,432		4,899
Real estate - mortgage:
1-4 family residential	24,886		31,985		2,140
Commercial	36,835		41,907		2,415
Consumer	170		274		130
Total	$	96,241	$	120,991	$	11,090

There were no PI loans with subsequent credit deterioration at December 31, 2011.

The following summary includes impaired loans individually reviewed as well as impaired loans held for sale. Average recorded investment and interest income recognized on impaired loans, segregated by portfolio segment, is shown in the following table as of September 30, 2012 and September 30, 2011:

	For Three Months Ended				For Three Months Ended
	September 30, 2012				September 30, 2011
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	1,557	$	56	$	2,417	$	—
Real estate - construction	15,484		104		29,789		—
Real estate - mortgage:
1-4 family residential	14,265		81		13,585		—
Commercial	44,480		567		29,453		—
Consumer	162		4		98		—
Total	$	75,948	$	812	$	75,342	$	—
With an allowance recorded:
Commercial and agricultural	$	1,274	$	6	$	2,751	$	—
Real estate - construction	2,802		9		47,884		—
Real estate - mortgage:
1-4 family residential	6,436		41		16,268		—
Commercial	4,689		27		21,647		—
Consumer	100		1		311		—
Total	$	15,301	$	84	$	88,861	$	—
Total:
Commercial and agricultural	$	2,831	$	62	$	5,168	$	—
Real estate - construction	18,286		113		77,673		—
Real estate - mortgage:
1-4 family residential	20,701		122		29,853		—
Commercial	49,169		594		51,100		—
Consumer	262		5		409		—
Total	$	91,249	$	896	$	164,203	$	—

	For Nine Months Ended				For Nine Months Ended
	September 30, 2012				September 30, 2011
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	1,879	$	152	$	3,305	$	—
Real estate - construction	18,140		350		49,617		—
Real estate - mortgage:
1-4 family residential	15,096		292		18,628		1
Commercial	46,051		1,388		49,736		1
Consumer	279		6		196		—
Total	$	81,445	$	2,188	$	121,482	$	2
With an allowance recorded:
Commercial and agricultural	$	1,266	$	36	$	5,803	$	—
Real estate - construction	2,873		32		60,131		—
Real estate - mortgage:
1-4 family residential	6,869		163		16,027		—
Commercial	4,687		145		42,990		1
Consumer	95		2		231		—
Total	$	15,790	$	378	$	125,182	$	1
Total:
Commercial and agricultural	$	3,145	$	188	$	9,108	$	—
Real estate - construction	21,013		382		109,748		—
Real estate - mortgage:
1-4 family residential	21,965		455		34,655		1
Commercial	50,738		1,533		92,726		2
Consumer	374		8		427		—
Total	$	97,235	$	2,566	$	246,664	$	3

Impaired loans also include loans for which FNB may elect to grant a concession, providing terms more favorable than those prevalent in the market (e.g., rate, amortization term), and formally restructure due to the weakening credit status of a borrower. Restructuring is designed to facilitate a repayment plan that minimizes the potential losses that FNB otherwise may have to incur. If these impaired loans are on nonaccruing status as of the date of restructuring, the loans are included in nonperforming loans. Nonperforming restructured loans will remain as nonperforming until the borrower can demonstrate adherence to the restructured terms for a period of no less than six months and when it is otherwise determined that continued adherence is reasonably assured. Some restructured loans continue as accruing loans after restructuring if the borrower is not past due at the time of restructuring, adequate collateral valuations support the restructured loans, and the cash flows of the underlying business appear adequate to support the restructured debt service. Not included in nonperforming loans are loans that have been restructured that were performing as of the restructure date. At September 30, 2012, there was $21.4 million in restructured loans, of which $3.6 million in loans were accruing and in a performing status. At December 31, 2011, there was $28.3 million in restructured loans, of which $2.9 million in loans were accruing and in a performing status.

Sale of Problem Loans

During 2011 and 2012, FNB sold loans to third party buyers in order to reduce its problem loan exposure. These loans were transferred to loans held for sale at the time FNB received a signed contract for the purchase of the loans. Prior to transferring these loans to loans held for sale, the loans were marked down to the contract price less associated selling costs. All transactions were conducted at arm's length and loans were sold without recourse.

The following table presents sold loans by portfolio segment for the periods indicated below:

	For Three Months Ended September 30, 2012					For Three Months Ended September 30, 2011
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	9	$	217	$	1,238
Real estate - construction	—	—		—		8	6,406		4,927
Real estate - mortgage:
1-4 family residential						—	—		—
Commercial	1	602		540		5	6,723		4,839
Consumer	—	—		—		1	96		190
Total	1	$	602	$	540	23	$	13,442	$	11,194

	For Nine Months Ended September 30, 2012					For Nine Months Ended September 30, 2011
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	14	$	3,505	$	3,190
Real estate - construction	—	—		—		13	16,723		11,899
Real estate - mortgage:
1-4 family residential	7	1,865		1,896		1	1,335		900
Commercial	2	4,402		4,590		8	12,071		10,186
Consumer	—	—		—		1	96		190
Total	9	$	6,267	$	6,486	37	$	33,730	$	26,365

During the three-month period ending September 30, 2012, one non-performing loan was placed under contract for sale, and was sold during the quarter.

Granite Purchased Loans

Granite Purchased Loans include PI Loans and PC Loans. PC Loans included performing revolving consumer and commercial loans on the acquisition date.

PI Loans are segregated into pools and recorded at estimated fair value on the date of acquisition without the carryover of the related ALL. PI Loans are accounted for under ASC 310-30 when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition we will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the date of acquisition may include statistics such as past due status, nonaccrual status and risk grade. PI Loans generally meet FNB's definition for nonaccrual status; however, even if the borrower is not currently making payments, FNB will classify loans as accruing if we can reasonably estimate the amount and timing of future cash flows.The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference.

Periodically, we estimate the expected cash flows for each pool of the PI Loans and evaluate whether the expected cash flows for each pool have changed from prior estimates. Decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or reclassification from nonaccretable difference to accretable yield with a positive impact on future interest income. Excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

We have elected to account for the Granite Purchased PI Loans under ASC 310-30 and the Granite Purchased PC Loans under ASC 310-20.

At September 30, 2012, our financial statements reflected a PI Loan ALL of $3.3 million and an ALL for originated and PC Loans of $0.5 million. All Granite Purchased PI Loans are presented on an accruing basis.

The following table presents the balance of all Granite Purchased Loans:

	At September 30, 2012
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	16,681	$	6,425	$	23,106	$	22,955
Real estate - construction	2,764		—		2,764		2,833
Real estate - mortgage:
1-4 family residential	42,538		28,672		71,210		74,075
Commercial	188,824		—		188,824		197,006
Consumer	1,398		—		1,398		1,284
Total	$	252,205	$	35,097	$	287,302	$	298,153

	At December 31, 2011
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	28,872	$	8,061	$	36,933	$	39,531
Real estate - construction	7,641		—		7,641		8,413
Real estate - mortgage:
1-4 family residential	52,894		34,590		87,484		93,310
Commercial	239,621		—		239,621		261,076
Consumer	1,808		1		1,809		1,800
Total	$	330,836	$	42,652	$	373,488	$	404,130

The tables below include only those Granite Purchased Loans accounted for under the expected cash flow method (PI Loans) for the periods indicated. These tables do not include PC Loans, including Granite Purchased PC Loans or purchased performing residential mortgage loans.

	For Nine Months Ended September 30, 2012						For Nine Months Ended December 31, 2011
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	330,836		$	47,804		$	—		$	—
Addition from Bank of Granite Corp acquisition	—			—			351,121			52,581
Accretion	15,831			(15,831		)	4,777			(4,777		)
Increase in future accretion	—			4,592			—			—
Payments received	(84,944		)	—			(24,467		)	—
Foreclosed and transferred to OREO	(9,518		)	—			(595		)	—
Subtotal before allowance	252,205			36,565			330,836			47,804
Allowance for credit losses	(3,296		)	—			—			—
Net carrying amount, end of period	$	248,909		$	36,565		$	330,836		$	47,804

Allowance for Loan Losses

An analysis of the changes in the ALL is as follows:

	For Three Months Ended						For Nine Months Ended
(dollars in thousands)	September 30,						September 30,
	2012			2011			2012			2011
Balance, beginning of period	$	38,551		$	59,366		$	39,360		$	93,687
Provision for losses charged to continuing operations	32			7,181			10,877			60,944
Net charge-offs:
Charge-offs	(9,276		)	(24,376		)	(23,580		)	(115,948		)
Recoveries	1,552			1,950			4,202			5,438
Net charge-offs	(7,724		)	(22,426		)	(19,378		)	(110,510		)
Balance, end of period	$	30,859		$	44,121		$	30,859		$	44,121
Annualized net charge-offs during the period to average loans	2.46		%	9.07		%	2.06		%	13.09		%
Annualized net charge-offs during the period to ALL	100.12		%	201.66		%	83.73		%	334.88		%
Allowance for loan losses to loans held for investment (1)	2.51		%	4.95		%	2.51		%	4.95		%

(1) Excludes discontinued operations.

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2012:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at July 1, 2012	$	7,151		$	11,320		$	8,784		$	9,218		$	2,078		$	38,551
Charge-offs	(1,156		)	(2,465		)	(1,646		)	(2,602		)	(1,407		)	(9,276		)
Recoveries	286			323			69			388			486			1,552
Provision	(1,128		)	(3,195		)	2,787			54			1,514			32
Ending balance at September 30, 2012	$	5,153		$	5,983		$	9,994		$	7,058		$	2,671		$	30,859

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2011:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at July 1, 2011	$	6,527		$	28,419		$	9,030		$	13,619		$	1,771		$	59,366
Charge-offs	(1,988		)	(13,740		)	(1,958		)	(5,848		)	(842		)	(24,376		)
Recoveries	226			1,217			59			96			352			1,950
Provision	204			4,606			(134		)	2,259			246			7,181
Ending balance at September 30, 2011	$	4,969		$	20,502		$	6,997		$	10,126		$	1,527		$	44,121

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2012:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2012	$	5,776		$	11,995		$	8,885		$	11,063		$	1,641		$	39,360
Charge-offs	(2,774		)	(8,761		)	(4,805		)	(3,594		)	(3,646		)	(23,580		)
Recoveries	777			1,169			447			725			1,084			4,202
Provision	1,374			1,580			5,467			(1,136		)	3,592			10,877
Ending balance at September 30, 2012	$	5,153		$	5,983		$	9,994		$	7,058		$	2,671		$	30,859

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2011:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2011	$	11,144		$	46,792		$	7,742		$	26,851		$	1,158		$	93,687
Charge-offs	(10,455		)	(57,912		)	(8,579		)	(36,028		)	(2,974		)	(115,948		)
Recoveries	759			2,121			621			838			1,099			5,438
Provision	3,521			29,501			7,213			18,465			2,244			60,944
Ending balance at September 30, 2011	$	4,969		$	20,502		$	6,997		$	10,126		$	1,527		$	44,121

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment methodology at September 30, 2012:

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	815	$	1,158	$	1,797	$	652	$	100	$	4,522
Collectively evaluated for impairment	2,564		4,690		7,593		5,657		2,537		23,041
PI loans evaluated for credit impairment	1,774		135		604		749		34		3,296
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL evaluated for impairment	$	5,153	$	5,983	$	9,994	$	7,058	$	2,671	$	30,859
Loans held for investment
Individually evaluated for impairment	$	2,567	$	17,510	$	20,014	$	46,980	$	100	$	87,171
Collectively evaluated for impairment	53,421		40,989		527,699		227,369		42,941		892,419
PI loans with subsequent credit deterioration	15,660		2,221		2,595		11,291		34		31,801
PI loans with no credit deterioration	1,021		543		39,943		177,533		1,364		220,404
Total loans evaluated for impairment	$	72,669	$	61,263	$	590,251	$	463,173	$	44,439	$	1,231,795

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment methodology at December 31, 2011:

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	1,506	$	4,899	$	2,140	$	2,415	$	130	$	11,090
Collectively evaluated for impairment	4,270		7,096		6,745		8,648		1,511		28,270
PI loans evaluated for credit impairment	—		—		—		—		—		—
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL evaluated for impairment	$	5,776	$	11,995	$	8,885	$	11,063	$	1,641	$	39,360
Loans held for investment
Individually evaluated for impairment	$	3,890	$	30,460	$	24,886	$	36,835	$	170	$	96,241
Collectively evaluated for impairment	62,327		54,705		375,945		254,927		42,554		790,458
PI loans with subsequent credit deterioration	—		—		—		—		—		—
PI loans with no credit deterioration	28,872		7,641		52,894		239,621		1,808		330,836
Total loans evaluated for impairment	$	95,089	$	92,806	$	453,725	$	531,383	$	44,532	$	1,217,535

Troubled Debt Restructuring

The following table presents a breakdown of troubled debt restructurings that were restructured during the three months ended September 30, 2012, segregated by portfolio segment:

	For Three Months Ended September 30, 2012					For Three Months Ended September 30, 2011
		Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
		Outstanding		Outstanding				Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number		Recorded		Recorded
	of Loans	Investment		Investment		of Loans		Investment		Investment
Commercial and agricultural	—	$	—	$	—	$	—	$	—	$	—
Real estate - construction	—	—		—		—		—		—
Real estate - mortgage:
1-4 family residential	1	202		202		1		155		155
Commercial	—	—		—		2		1,651		1,651
Consumer	—	—		—		—		—		—
Total	1	$	202	$	202	$	3	$	1,806	$	1,806

The following table presents a breakdown of troubled debt restructurings that were restructured during the nine months ended September 30, 2012, segregated by portfolio segment:

	For Nine Months Ended September 30, 2012					For Nine Months Ended September 30, 2011
		Pre-Modification		Post-Modification				Pre-Modification		Post-Modification
		Outstanding		Outstanding				Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number		Recorded		Recorded
	of Loans	Investment		Investment		of Loans		Investment		Investment
Commercial and agricultural	—	$	—	$	—	$	6	$	555	$	555
Real estate - construction	9	2,526		1,603		6		3,612		3,612
Real estate - mortgage:
1-4 family residential	3	260		260		8		401		401
Commercial	8	1,356		1,353		13		7,904		7,904
Consumer	—	—		—		—		—		—
Total	20	$	4,142	$	3,216	$	33	$	12,472	$	12,472

During the three months ended September 30, 2012, FNB modified 1 loan that was considered to be a troubled debt restructuring. FNB extended the terms for this loan, but did not modify the interest rate. During the nine months ended September 30, 2012, FNB modified twenty loans that was considered to be troubled debt restructurings. FNB extended the terms for sixteen of these loans, the interest rate was lowered for two of these loans, and the two remaining loans were modified both ways.

There were no loans restructured in the twelve months prior to September 30, 2012 that went into default during the three months or nine months ended September 30, 2012. There were also no loans restructured in the twelve months prior to September 30, 2011 that went into default during the three months or nine months ended September 30, 2011 .

In the determination of the ALL, management considers troubled debt restructurings and any subsequent defaults in these restructurings as impaired loans. The amount of the impairment is measured using the present value of expected future cash flows discounted at the loan's effective interest rate, the observable market price of the loan, or the fair value of the collateral if the loan is collateral dependent.

Unfunded Commitments

The reserve for unfunded commitments, which is included in other liabilities, is calculated by determining the type of commitment and the remaining unfunded commitment for each loan. Based on the type of commitment, an expected usage percentage to the remaining unfunded balance is applied. The expected usage percentage is multiplied by the historical losses and qualitative and environmental factors for each loans pool as defined in the regular ALL calculation to determine the appropriate level of reserve. The expected usage percentages for each commitment type are as follows:

• Construction draws - 100%

• Equity lines of credit - 50%

• Letters of Credit - 10%

The reserve for unfunded commitments was $0.9 million as of September 30, 2012 and $0.6 million at December 31, 2011.

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Other Real Estate Owned and Property Acquired in Settlement of Loans

9 Months Ended

Sep. 30, 2012

Repossessed Assets [Abstract]

Other Real Estate Owned and Property Acquired in Settlement of Loans

Other Real Estate Owned and Personal Property Acquired in Settlement of Loans

Other Real Estate Owned ("OREO") consists of real estate acquired through foreclosure or deed in lieu thereof. The property is classified as held for sale. The property is initially carried at fair value based on recent appraisals, less estimated costs to sell. Declines in the fair value of properties included in other real estate below carrying value are recognized by a charge to income.

Total OREO and personal property acquired in settlement of loans decreased $29.6 million during the first nine months of 2012 from $110.4 million at December 31, 2011, to $80.8 million at September 30, 2012. This represents 48% of total nonperforming assets. At December 31, 2011, OREO and personal property acquired in settlement of loans represented 51% of total nonperforming assets.

The following table summarizes OREO and personal property acquired in settlement of loans at the periods indicated:

(dollars in thousands)	September 30, 2012		December 31, 2011
Real estate acquired in settlement of loans	$	80,482	$	110,009
Personal property acquired in settlement of loans	318		377
Total property acquired in settlement of loans	$	80,800	$	110,386

The following tables summarize the changes in real estate acquired in settlement of loans at the periods indicated:

	For Three Months Ended
(dollars in thousands)	September 30, 2012			September 30, 2011
Real estate acquired in settlement of loans, beginning of period	$	86,183		$	101,384
Plus: New real estate acquired in settlement of loans	9,746			27,278
Less: Sales of real estate acquired in settlement of loans	(13,826		)	(29,122		)
Less: Write-downs and net loss on sales charged to expense	(1,621		)	(3,441		)
Real estate acquired in settlement of loans, end of period	$	80,482		$	96,099

	For Nine Months Ended
(dollars in thousands)	September 30, 2012			September 30, 2011
Real estate acquired in settlement of loans, beginning of period	$	110,009		$	62,058
Plus: New real estate acquired in settlement of loans	24,766			101,245
Less: Sales of real estate acquired in settlement of loans	(38,202		)	(39,521		)
Less: Write-downs and net loss on sales charged to expense	(16,091		)	(27,683		)
Real estate acquired in settlement of loans, end of period	$	80,482		$	96,099

At September 30, 2012, 58 assets with a net carrying amount of $18.2 million were under contract for sale. Estimated losses on these sales have been recognized in the Consolidated Statements of Operations in the first nine months of 2012.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative and Financial Instruments

Derivatives and Financial Instruments

A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. These instruments include interest rate swaps, caps, floors, collars, options or other financial instruments designed to hedge exposures to interest rate risk or for speculative purposes.

Accounting guidance requires an entity to recognize all derivatives as either assets or liabilities in the balance sheet, and measure those instruments at fair value. Changes in the fair value of those derivatives are reported in current earnings or other comprehensive income depending on the purpose for which the derivative is held and whether the derivative qualifies for hedge accounting.

For the three and nine months ended September 30, 2011, the interest rate swaps designated as a fair value hedge resulted in decreased interest expense of $175,000 and $629,000, respectively, on FHLB advances than would otherwise have been recognized for the liability. The fair value of the swaps at September 30, 2011 was recorded on the Consolidated Balance Sheets as an asset in the amount of $0.8 million.

Because the swaps were terminated in 2011, there were no net gains or losses recognized on the fair value swaps for the three and nine months ended September 30, 2012. However, net gains recognized on the fair value swaps during the nine months ended September 30, 2011 were $933,000.

Mortgage banking derivatives used in the ordinary course of business consist of mandatory forward sales contracts or forward contracts and rate lock loan commitments. The fair value of FNB's derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants.

The table below provides data about the amount of gains and losses related to derivative instruments designated as hedges included in “Other income” in the FNB's Consolidated Statements of Operations:

	Gain, Net of Tax
	Recognized in Income
(dollars in thousands)	For Three Months Ended				For Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Derivatives designated as hedging instruments:
Interest rate swap contracts - FHLB advances	$	—	$	463	$	—	$	565

Continuing Operations

During 2012, FNB began originating residential mortgage loans for sale in the secondary market. FNB has established guidelines in originating, selling loans to Fannie Mae, and retaining or selling the loan servicing rights. The commitments to borrowers to originate residential mortgage loans and the forward sales commitments to investors are freestanding derivative instruments. As such, they do not qualify for hedge accounting treatment, and the fair value adjustments for these instruments is recorded through the income statement in mortgage loan income. The fair market value of mortgage banking derivatives at September 30, 2012 was recorded in the consolidated balance sheet under Other Assets.

	Gain (Loss) recognized
(dollars in thousands)	For Three Months Ended					For Nine Months Ended
	September 30, 2012			September 30, 2011		September 30, 2012			September 30, 2011
Derivatives not designated as hedging instruments:
Mortgage loan rate lock commitments (1)	$	134		$	—	$	311		$	55
Mortgage loan forward sales and MBS (1)	(134		)	—		(311		)	(44		)
Total	$	—		$	—	$	—		$	11

(1) For 2011, recognized in "Net loss from discontinued operations" in FNB's Consolidated Statements of Operations.

Discontinued Operations

On April 7, 2009, Dover irrevocably opted to elect the fair value option for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. This election allowed Dover to enter into a hedging arrangement for the purpose of limiting risk inherent in the mortgage loan pipeline and loans held for sale portfolio.

Dover originated certain residential mortgage loans with the intention of selling these loans. Between the time that Dover entered into an interest rate lock or a commitment to originate a residential mortgage loan with a potential borrower and the time the closed loan is sold, FNB was subject to variability in market prices related to these commitments. FNB believed that it was prudent to limit the variability of expected proceeds from the future sales of these loans by entering into forward sales commitments and commitments to deliver loans into a mortgage-backed security. The commitments to originate residential mortgage loans and the forward sales commitments were freestanding derivative instruments. They did not qualify for hedge accounting treatment so their fair value adjustments were recorded through the income statement in income from mortgage loan sales.

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Termination of Retirement Plan (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Compensation and Retirement Disclosure [Abstract]
Gain on termination	$ 371	$ 0	$ 371	$ 0

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Investment Securities (Continuous Unrealized Loss Position) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012 securities	Dec. 31, 2011 securities
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, estimated fair value	$ 16,676	$ 137,577
Less than 12 months, gross unrealized losses	536	2,193
12 months or more, estimated fair value	19,275	16,552
12 months or more, gross unrealized losses	117	180
Total, estimated fair value	35,951	154,129
Total, gross unrealized losses	653	2,373
Less than 12 months, number of securities	7	32
12 months or more, number of securities	4	7
Obligations of U.S. government sponsored agencies [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, estimated fair value		21,248
Less than 12 months, gross unrealized losses		151
12 months or more, estimated fair value		0
12 months or more, gross unrealized losses		0
Total, estimated fair value		21,248
Total, gross unrealized losses		151
Obligations of states and political subdivisions [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, estimated fair value		1,907
Less than 12 months, gross unrealized losses		1
12 months or more, estimated fair value		0
12 months or more, gross unrealized losses		0
Total, estimated fair value		1,907
Total, gross unrealized losses		1
Residential mortgage-backed securities - GSE [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, estimated fair value	5,599	89,730
Less than 12 months, gross unrealized losses	24	1,042
12 months or more, estimated fair value	19,275	16,552
12 months or more, gross unrealized losses	117	180
Total, estimated fair value	24,874	106,282
Total, gross unrealized losses	141	1,222
Residential mortgage-backed securities - private [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, estimated fair value	7,858	21,519
Less than 12 months, gross unrealized losses	472	967
12 months or more, estimated fair value	0	0
12 months or more, gross unrealized losses	0	0
Total, estimated fair value	7,858	21,519
Total, gross unrealized losses	472	967
Corporate notes [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, estimated fair value	3,219	3,173
Less than 12 months, gross unrealized losses	40	32
12 months or more, estimated fair value	0	0
12 months or more, gross unrealized losses	0	0
Total, estimated fair value	3,219	3,173
Total, gross unrealized losses	$ 40	$ 32

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Loans (Unfunded Commitment) (Details) (USD $) In Millions, unless otherwise specified			9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Real estate - construction [Member]	Sep. 30, 2012 Equity lines of credit [Member]	Sep. 30, 2012 Letters of credit [Member]
Unfunded Commitments [Line Items]
Expected usage percentage of remaining unfunded commitments			100.00%	50.00%	10.00%
Reserve for unfunded commitments	$ 0.9	$ 0.6

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2012

Discontinued Operation, Additional Disclosures [Abstract]

Schedule of Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations at the dates indicated were as follows:

(dollars in thousands)	September 30, 2012		December 31, 2011
Assets
Loans held for sale	$	—	$	233
Premises and equipment, net	—		5
Other real estate owned	—		—
Other assets	—		7
Assets of discontinued operations	$	—	$	245
Liabilities
Other liabilities	$	—	$	1,092
Liabilities of discontinued operations	$	—	$	1,092

Schedule of Net Income (Loss) from Discontinued Operations

Net loss from discontinued operations, net of tax, at the dates indicated were as follows:

(dollars in thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Interest Income
Interest and fees on loans	$	—	$	12		$	—		$	67
Total interest income	—		12			—			67
Interest Expense
Other borrowed funds	—		—			—			—
Total interest expense	—		—			—			—
Net Interest Income before Provision for Loan Losses	—		12			—			67
Provision for loan losses	—		—			—			—
Net Interest Income after Provision for Loan Losses	—		12			—			67
Noninterest Income
Mortgage loan loss	—		(2		)	—			(167		)
Other service charges, commissions and fees, net	—		—			—			(11		)
Other income	—		—			—			10
Total noninterest loss	—		(2		)	—			(168		)
Noninterest Expense
Personnel expense	—		(1		)	1			1,442
Net occupancy expense	—		5			1			216
Furniture, equipment and data processing expense	—		14			—			185
Professional fees	—		31			25			209
Stationery, printing and supplies	—		—			—			8
Advertising and marketing	—		(1		)	—			27
Other real estate owned expense	—		—			—			166
Provision for recourse loans	—		(8		)	—			3,317
Other expense	—		10			—			264
Total noninterest expense	—		50			27			5,834
Loss before income taxes	—		(40		)	(27		)	(5,935		)
Income tax (benefit)/expense	—		—			—			(213		)
Net loss from discontinued operations, net of tax	$	—	$	(40	)	$	(27	)	$	(5,722	)

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Designated as hedges [Member]

Derivative Instruments, Gain (Loss) [Line Items]

Schedule of Derivative Instruments, Gain (Loss)

The table below provides data about the amount of gains and losses related to derivative instruments designated as hedges included in “Other income” in the FNB's Consolidated Statements of Operations:

	Gain, Net of Tax
	Recognized in Income
(dollars in thousands)	For Three Months Ended				For Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Derivatives designated as hedging instruments:
Interest rate swap contracts - FHLB advances	$	—	$	463	$	—	$	565

Not designated as hedges [Member] | Continuing operations [Member]

Derivative Instruments, Gain (Loss) [Line Items]

Schedule of Derivative Instruments, Gain (Loss)

	Gain (Loss) recognized
(dollars in thousands)	For Three Months Ended					For Nine Months Ended
	September 30, 2012			September 30, 2011		September 30, 2012			September 30, 2011
Derivatives not designated as hedging instruments:
Mortgage loan rate lock commitments (1)	$	134		$	—	$	311		$	55
Mortgage loan forward sales and MBS (1)	(134		)	—		(311		)	(44		)
Total	$	—		$	—	$	—		$	11

(1) For 2011, recognized in "Net loss from discontinued operations" in FNB's Consolidated Statements of Operations.

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Loans (Evaluation for Impairment) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL, individually evaluated for impairment	$ 4,522		$ 11,090
ALL, collectively evaluated for impairment	23,041		28,270
ALL, PI loans evluated for credit impairment	3,296		0
ALL, PI loans with no credit deterioration	0		0
Total ALL evaluated for impairment	30,859	38,551	39,360	44,121	59,366	93,687
Loans held for investment, individually evaluated for impairment	87,171		96,241
Loans held for investment, collectively evaluated for impairment	892,419		790,458
Loans held for investment, PI loans with subsequent credit deterioration	31,801		0
Loans held for investment, PI loans with no credit deterioration	220,404		330,836
Loans held for investment	1,231,795		1,217,535
Commercial and agricultural [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL, individually evaluated for impairment	815		1,506
ALL, collectively evaluated for impairment	2,564		4,270
ALL, PI loans evluated for credit impairment	1,774		0
ALL, PI loans with no credit deterioration	0		0
Total ALL evaluated for impairment	5,153	7,151	5,776	4,969	6,527	11,144
Loans held for investment, individually evaluated for impairment	2,567		3,890
Loans held for investment, collectively evaluated for impairment	53,421		62,327
Loans held for investment, PI loans with subsequent credit deterioration	15,660		0
Loans held for investment, PI loans with no credit deterioration	1,021		28,872
Loans held for investment	72,669		95,089
Real estate - construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL, individually evaluated for impairment	1,158		4,899
ALL, collectively evaluated for impairment	4,690		7,096
ALL, PI loans evluated for credit impairment	135		0
ALL, PI loans with no credit deterioration	0		0
Total ALL evaluated for impairment	5,983	11,320	11,995	20,502	28,419	46,792
Loans held for investment, individually evaluated for impairment	17,510		30,460
Loans held for investment, collectively evaluated for impairment	40,989		54,705
Loans held for investment, PI loans with subsequent credit deterioration	2,221		0
Loans held for investment, PI loans with no credit deterioration	543		7,641
Loans held for investment	61,263		92,806
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL, individually evaluated for impairment	1,797		2,140
ALL, collectively evaluated for impairment	7,593		6,745
ALL, PI loans evluated for credit impairment	604		0
ALL, PI loans with no credit deterioration	0		0
Total ALL evaluated for impairment	9,994	8,784	8,885	6,997	9,030	7,742
Loans held for investment, individually evaluated for impairment	20,014		24,886
Loans held for investment, collectively evaluated for impairment	527,699		375,945
Loans held for investment, PI loans with subsequent credit deterioration	2,595		0
Loans held for investment, PI loans with no credit deterioration	39,943		52,894
Loans held for investment	590,251		453,725
Real estate - mortgage, commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL, individually evaluated for impairment	652		2,415
ALL, collectively evaluated for impairment	5,657		8,648
ALL, PI loans evluated for credit impairment	749		0
ALL, PI loans with no credit deterioration	0		0
Total ALL evaluated for impairment	7,058	9,218	11,063	10,126	13,619	26,851
Loans held for investment, individually evaluated for impairment	46,980		36,835
Loans held for investment, collectively evaluated for impairment	227,369		254,927
Loans held for investment, PI loans with subsequent credit deterioration	11,291		0
Loans held for investment, PI loans with no credit deterioration	177,533		239,621
Loans held for investment	463,173		531,383
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
ALL, individually evaluated for impairment	100		130
ALL, collectively evaluated for impairment	2,537		1,511
ALL, PI loans evluated for credit impairment	34		0
ALL, PI loans with no credit deterioration	0		0
Total ALL evaluated for impairment	2,671	2,078	1,641	1,527	1,771	1,158
Loans held for investment, individually evaluated for impairment	100		170
Loans held for investment, collectively evaluated for impairment	42,941		42,554
Loans held for investment, PI loans with subsequent credit deterioration	34		0
Loans held for investment, PI loans with no credit deterioration	1,364		1,808
Loans held for investment	$ 44,439		$ 44,532

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Loans (Nonaccrual Status) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest lost on nonaccrual loans	$ 1,500,000	$ 3,500,000	$ 2,900,000	$ 7,600,000
Loans on nonaccrual status	85,100,000		85,100,000		103,000,000
90 or more days past due and accruing	1,071,000		1,071,000		3,000,000
Net loans held for investment	1,200,936,000		1,200,936,000		1,178,175,000
Commercial and agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90 or more days past due and accruing	671,000		671,000		305,000
Real estate - construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90 or more days past due and accruing	0		0		1,400,000
Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90 or more days past due and accruing	58,000		58,000		292,000
Real estate - mortgage, commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90 or more days past due and accruing	339,000		339,000		1,003,000
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90 or more days past due and accruing	3,000		3,000		0
Nonperforming [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans held for investment on nonaccrual status	85,072,000		85,072,000		98,444,000
90 or more days past due and accruing	1,071,000		1,071,000		3,000,000
Net loans held for investment	86,143,000		86,143,000		101,444,000
Loans held for sale on nonaccrual status	0		0		4,529,000
Nonperforming [Member] | Commercial and agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans held for investment on nonaccrual status	2,476,000		2,476,000		4,636,000
Nonperforming [Member] | Real estate - construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans held for investment on nonaccrual status	18,506,000		18,506,000		30,844,000
Loans held for sale on nonaccrual status	0		0		1,807,000
Nonperforming [Member] | Real estate - mortgage, 1-4 family residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans held for investment on nonaccrual status	22,073,000		22,073,000		26,048,000
Loans held for sale on nonaccrual status	0		0		517,000
Nonperforming [Member] | Real estate - mortgage, commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans held for investment on nonaccrual status	41,794,000		41,794,000		36,666,000
Loans held for sale on nonaccrual status	0		0		2,205,000
Nonperforming [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans held for investment on nonaccrual status	223,000		223,000		250,000
Loans held for sale on nonaccrual status	$ 0		$ 0		$ 0

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Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
Net loss	$ (4,712)	$ (13,930)	$ (33,709)	$ (106,611)
Other comprehensive income:
Unrealized gains arising from termination of supplemental executive retirement plans	371	0	371	0
Unrealized holdings gains arising during the period on available-for-sale securities	5,633	3,612	10,817	8,132
Tax effect	(2,225)	(1,427)	(4,245)	(3,212)
Unrealized holdings gains arising during the period on available-for-sale securities, net of tax	3,408	2,185	6,572	4,920
Reclassification adjustment for (gain) loss on available-for-sale securities included in net income	33	(7,393)	(1,923)	(7,308)
Tax effect	(13)	2,920	760	2,888
Reclassification adjustment for (gain) loss on available-for-sale securities included in net income, net of tax	20	(4,473)	(1,163)	(4,420)
Other comprehensive income, net of tax	3,799	(2,288)	5,780	500
Total comprehensive loss	$ (913)	$ (16,218)	$ (27,929)	$ (106,111)

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Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operation, Additional Disclosures [Abstract]

Discontinued Operations

Discontinued Operations

All operations of Dover, a subsidiary of CommunityOne, were discontinued as of March 17, 2011. Dover, acquired by FNB in 2003, originated, underwrote and closed mortgage loans for sale into the secondary market. It maintained a retail origination network based in Charlotte, North Carolina, which originated loans for properties located in North Carolina. Dover also engaged in the wholesale mortgage origination business and conducted retail mortgage origination business outside of North Carolina. Operations outside of the State of North Carolina and the wholesale mortgage origination business were discontinued in February 2011, and all remaining operations were discontinued on March 17, 2011. Dover filed for Chapter 11 bankruptcy on February 15, 2012 in the United States Bankruptcy Court for the Western District of North Carolina. All of the assets and liabilities of Dover were written off at that time.

The results of operations of a component of an entity that has been disposed of shall be reported in discontinued operations if both the operations and cash flows of the component have been, or will be, eliminated from ongoing operations of the entity as a result of the disposal transaction and the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction. As a result, the Consolidated Balance Sheets, Statements of Operations and Statement of Cash Flows for all periods reflect retrospective application of Dover's classification as a discontinued operation.

Assets and liabilities of discontinued operations at the dates indicated were as follows:

(dollars in thousands)	September 30, 2012		December 31, 2011
Assets
Loans held for sale	$	—	$	233
Premises and equipment, net	—		5
Other real estate owned	—		—
Other assets	—		7
Assets of discontinued operations	$	—	$	245
Liabilities
Other liabilities	$	—	$	1,092
Liabilities of discontinued operations	$	—	$	1,092

Net loss from discontinued operations, net of tax, at the dates indicated were as follows:

(dollars in thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Interest Income
Interest and fees on loans	$	—	$	12		$	—		$	67
Total interest income	—		12			—			67
Interest Expense
Other borrowed funds	—		—			—			—
Total interest expense	—		—			—			—
Net Interest Income before Provision for Loan Losses	—		12			—			67
Provision for loan losses	—		—			—			—
Net Interest Income after Provision for Loan Losses	—		12			—			67
Noninterest Income
Mortgage loan loss	—		(2		)	—			(167		)
Other service charges, commissions and fees, net	—		—			—			(11		)
Other income	—		—			—			10
Total noninterest loss	—		(2		)	—			(168		)
Noninterest Expense
Personnel expense	—		(1		)	1			1,442
Net occupancy expense	—		5			1			216
Furniture, equipment and data processing expense	—		14			—			185
Professional fees	—		31			25			209
Stationery, printing and supplies	—		—			—			8
Advertising and marketing	—		(1		)	—			27
Other real estate owned expense	—		—			—			166
Provision for recourse loans	—		(8		)	—			3,317
Other expense	—		10			—			264
Total noninterest expense	—		50			27			5,834
Loss before income taxes	—		(40		)	(27		)	(5,935		)
Income tax (benefit)/expense	—		—			—			(213		)
Net loss from discontinued operations, net of tax	$	—	$	(40	)	$	(27	)	$	(5,722	)

All financial information in the consolidated financial statements and notes to the consolidated financial statements reflects continuing operations, unless otherwise noted.

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Fair Values of Assets and Liabilities (Unobservable Inputs Reconciliations) (Details) (Recurring [Member], Level 3 [Member], Mortgage servicing rights [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Recurring [Member] | Level 3 [Member] | Mortgage servicing rights [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning balance	$ 25	$ 0	$ 0	$ 2,359
Total gains or losses (realized/unrealized) included in earnings	223	0	248	(117)
Servicing rights sold			0	(2,242)
Ending balance	$ 248	$ 0	$ 248	$ 0

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Fair Values of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods indicated:

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Three Months Ended September 30,
	2012		2011
Beginning balance at July 1,	$	25	$	—
Total gains or losses (realized/unrealized):
Included in earnings, net of amortization	223		—
Ending balance at September 30,	$	248	$	—

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Nine Months Ended September 30,
	2012		2011
Beginning balance at January 1,	$	—	$	2,359
Total gains or losses (realized/unrealized):
Included in earnings, net of amortization	248		(117		)
Servicing rights sold	—		(2,242		)
Ending balance at September 30,	$	248	$	—

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

(dollars in thousands)	Fair Value at September 30, 2012		Valuation Techniques	Unobservable Input	Range
Nonrecurring measurements:
Impaired loans, net	$	10,247	Discounted appraisals	Collateral discounts	6.00% - 40.00%
Other real estate owned	56,431		Discounted appraisals	Collateral discounts	6.00% - 40.00%
Mortgage servicing rights	248		Discounted cash flows	Prepayment rate	10.00% - 30.00%
Mortgage servicing rights				Discount rate	6.00% - 12.00%

Continuing operations [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and liabilities carried at fair value on a recurring basis at September 30, 2012 for continuing operations, including financial instruments that FNB accounts for under the fair value option, are summarized in the following table:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale debt securities:
U.S. Treasury and government agencies	$	6,922	—		$	6,922	—
U.S. government sponsored agencies	22,185		—		22,185		—
States and political subdivisions	6,062		—		6,062		—
Residential mortgage-backed securities-GSE	367,767		—		367,767		—
Residential mortgage-backed securities-Private	23,722		—		23,722		—
Commercial mortgage-backed securities-GSE	23,248				23,248
Commercial mortgage-backed securities-Private	5,360		—		5,360		—
Corporate notes	37,120		—		37,120		—
Total available-for-sale debt securities	492,386		—		492,386		—
Mortgage servicing rights	248		—		—		248
Total assets at fair value from continuing operations	$	492,634	$	—	$	492,386	$	248

Assets and liabilities carried at fair value on a recurring basis at December 31, 2011 for continuing operations, including financial instruments that FNB accounts for under the fair value option, are summarized in the following table:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale debt securities:
U.S. Treasury and government agencies	$	7,188	$	—	$	7,188	$	—
U.S. government sponsored agencies	32,364		—		32,364		—
States and political subdivisions	6,090		—		6,090		—
Residential mortgage-backed securities-GSE	350,273		—		350,273		—
Residential mortgage-backed securities-Private	32,217		—		32,217		—
Corporate notes	3,174		—		3,174		—
Total available-for-sale debt securities	431,306		—		431,306		—
Total assets at fair value from continuing operations	$	431,306	$	—	$	431,306	$	—

Fair Value Measurements, Nonrecurring

Assets measured at fair value on a nonrecurring basis are included in the following table at September 30, 2012 for continuing operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	10,247	—		—		$	10,247
Other real estate owned	56,431		—		—		56,431
Total assets at fair value from continuing operations	$	66,678	$	—	$	—	$	66,678

Subsequent to their initial recognition at fair value during the quarter ended December 31, 2011, purchased impaired loans and purchased contractual loans are no longer recorded at their fair value and therefore these loans are not included in the above table of assets measured at fair value on a nonrecurring basis at September 30, 2012.

Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2011 for continuing operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Loans held for sale	$	4,529	$	—	$	4,529	$	—
Impaired loans, net	31,266		—		—		31,266
Purchased impaired loans	308,594		—		—		308,594
Purchased contractual loans	65,283		—		—		65,283
Other real estate owned	84,794		—		—		84,794
Total assets at fair value from continuing operations	$	494,466	$	—	$	4,529	$	489,937

Fair Value, by Balance Sheet Grouping

The estimated fair values of financial instruments for continuing operations are as follows at the periods indicated:

	At September 30, 2012
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets of Continuing Operations:
Cash and cash equivalents	$	327,870	$	327,870	$	327,870	$	—	—
Investment securities: Available-for-sale	492,386		492,386		—		492,386		—
Loans held for sale	8,212		8,212		—		8,212		—
Loans, net	1,200,936		1,192,784		—		—		1,192,784
Accrued interest receivable	7,424		7,424		—		7,424		—
Financial Liabilities of Continuing Operations:
Deposits	1,982,253		1,987,807		—		1,987,807		—
Retail repurchase agreements	9,433		9,433		—		9,433		—
Federal Home Loan Bank advances	58,339		63,649		—		63,649		—
Junior subordinated debentures	56,702		37,068		—		—		37,068
Accrued interest payable	1,969		1,969		—		1,969		—

	At December 31, 2011
(dollars in thousands)	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets of Continuing Operations:
Cash and cash equivalents	$	553,416	$	553,416	$	553,416	$	—	$	—
Investment securities: Available-for-sale	431,306		431,306		—		431,306		—
Loans held for sale	4,529		4,529		—		4,529		—
Loans, net	1,178,175		1,176,795		—		—		1,176,795
Accrued interest receivable	5,919		5,919		—		5,919		—
Financial Liabilities of Continuing Operations:
Deposits	2,129,111		2,139,093		—		2,139,093		—
Retail repurchase agreements	8,838		8,838		—		8,838		—
Federal Home Loan Bank advances	58,370		62,555		—		62,555		—
Junior subordinated debentures	56,702		36,218		—		—		36,218
Accrued interest payable	1,654		1,654		—		1,654		—

Discontinued operations [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements, Nonrecurring

Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2011 for discontinued operations:

(dollars in thousands)	Total		Level 1		Level 2		Level 3
Loans held for sale	$	233	$	—	$	233	$	—
Total assets at fair value from discontinued operations	$	233	$	—	$	233	$	—

Fair Value, by Balance Sheet Grouping

The estimated fair values of financial instruments for discontinued operations are as follows:

	As of September 30, 2012				As of December 31, 2011
(dollars in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets of Discontinued Operations	$	—	$	—	$	233	$	233
Financial Liabilities of Discontinued Operations	—		—		—		—

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Loans (Loans Pledged) (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Loans Receivable, Net [Abstract]
Loans pledged to collateralize FHLB advances and letters of credit	$ 293.1	$ 339.4
Credit availability for borrowing under FHLB advances and letters of credit	23.9	69.5
Loans pledged to collateralize potential borrowings from Federal Reserve Discount Window	40.9
Securities pledged to collateralized potential borrowings from Federal Reserve Discount Window	4.0
Borrowing capacity under Federal Reserve Discount Window	$ 26.2

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States ("GAAP"). Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowances for loan losses (“ALL”), the carrying value of other real estate owned (“OREO”), the carrying value of intangible assets, the fair value of net assets acquired in the Merger and the realization of deferred tax assets.

Reclassification

Reclassification

Certain reclassifications have been made to the prior period consolidated financial statements to place them on a comparable basis with the current period consolidated financial statements. These reclassifications have no effect on net income or shareholders' equity as previously reported.

During the first quarter of 2012, FNB implemented a purchased loan accounting system and finalized its methodology to allocate the fair value of purchased impaired loans in pools to individual loans for purposes of several of the loan disclosure tables in Note 5 to the consolidated financial statements. In order to present these tables for prior periods on a comparable basis to current period tables in these consolidated financial statements, we have reclassified certain amounts as of December 31, 2011 in the tables between loan portfolio segments and classes, between purchased contractual and purchased impaired loans, and between risk grade categories. These reclassifications have no effect on net income, the loan fair value mark, total loans or shareholders' equity as of or for the period ended December 31, 2011.

Subsequent Events

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date of this filing and has concluded that no subsequent events have occurred requiring accrual or disclosure in addition to that included herein.

Disclosure about Fair Value

Disclosures about Fair Value -Accounting Standards Update ("ASU") 2011-04 was issued in May 2011 to amend the Fair Value Measurement topic of the Accounting Standards Codification ("ASC") by clarifying the application of existing fair value measurement and disclosure requirements and by changing particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The amendment was effective for FNB on January 1, 2012, and the related disclosures are presented in Note 9.

Comprehensive Income

Comprehensive Income - The Comprehensive Income topic of the ASC was amended in June 2011. The amendment eliminates the option to present other comprehensive income as a part of the statement of changes in shareholders' equity and requires consecutive presentation of the statement of net income and other comprehensive income. The amendments were to become applicable to FNB on January 1, 2012 and were to be applied retrospectively. In December 2011, the topic was further amended to defer the effective date of presenting reclassification adjustments from other comprehensive income to net income on the face of the financial statements. Companies should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect prior to the amendments while FASB redeliberates future requirements. The remaining provisions of this update took effect for FNB on January 1, 2012.