F.N.B. (FN2) Risk Analysis

Our Articles of Incorporation and By-laws contain certain anti-takeover provisions that may discourage or may make more difficult or expensive a tender offer, change in control or takeover attempt that is opposed by our Board of Directors. In particular, consistent with Pennsylvania law, our Articles of Incorporation and By-laws: - require shareholders to give us advance notice to nominate candidates for election to our Board of Directors or to solicit proxies in support of such candidates, or to make shareholder proposals at a shareholders' meeting;- permit our Board of Directors to issue, without approval of our common shareholders unless otherwise required by law, preferred stock with such terms as our Board of Directors may determine;- provide that a special meeting may only be called by shareholders holding not less than 25% of all votes entitled to be cast on each issue at the proposed special meeting; and - require the vote of the holders of at least 75% of our voting shares for shareholder amendments to our By-laws. In the case of a proposed business combination with a shareholder owning more than 10% of the voting shares of FNB (an "interested shareholder"), the vote of the holders of at least two-thirds of the voting shares not owned by such shareholder is required to approve the business combination. A majority of FNB's disinterested directors have exclusive authority to determine whether a shareholder is an interested shareholder, the extent of such shareholder's beneficial ownership, whether any shareholder is an affiliate or associate of an interested shareholder, and whether any securities to be issued in the transaction exceed applicable fair market value thresholds. The aforementioned voting requirement does not apply if any one of several conditions is satisfied: - a majority of FNB's disinterested directors approve the transaction;- FNB has had fewer than 300 shareholders of record during the prior three years;- the interested shareholder has beneficially owned at least 80% of FNB's outstanding voting shares for at least five years; or - the interested shareholder beneficially owns at least 90% of the outstanding voting shares (excluding shares acquired directly from FNB without the approval of a majority of the disinterested directors). The voting requirement is also inapplicable where the affiliated transaction satisfies specified "fair price" and procedural protections, including payment of consideration meeting minimum value standards, use of cash or matching consideration previously paid by the interested shareholder, maintenance of regular dividend practices, restrictions on additional acquisitions of voting share by the interested shareholder, the distribution of a proxy or information statement at least 25 days prior to consummation of the transaction unless otherwise approved by a majority of the disinterested directors, and affiliated transactions wherein the interested shareholder became an interested shareholder inadvertently. These provisions of our Articles of Incorporation and By-laws and of Pennsylvania law could discourage potential acquisition proposals and could delay or prevent a change in control, even though the holders of a majority of our stock may consider such proposals desirable. Such provisions could also make it more difficult for third parties to remove and replace members of our Board of Directors. Moreover, these provisions could diminish the opportunities for shareholders to participate in certain tender offers, including tender offers at prices above the then-current market price of our common stock, and may also inhibit increases in the trading price of our common stock that could result from takeover attempts.