1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)

For the fiscal year ended December 31, 1997
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

For the transition period from to
-------------------- --------------------

Commission file number 0-8144

F.N.B. CORPORATION
- - -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Pennsylvania 25-1255406
- - ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

One F.N.B. Boulevard
Hermitage, Pennsylvania 16148
- - --------------------------------------- -------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 724-981-6000
------------
Securities registered pursuant to Section 12(b) of the Act: NONE
----
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $2 per share

7 1/2% Cumulative Convertible Preferred Stock, Series B,
par value $10 per share
- - --------------------------------------------------------------------------------
(Title of Class)

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
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The registrant estimates that as of February 28, 1998, the aggregate market
value of the voting stock held by non-affiliates of the registrant, computed by
reference to the last sale price as reported in the NASDAQ system for such date,
was approximately $567,545,955.

APPLICABLE ONLY TO CORPORATE REGISTRANTS:

As of February 28, 1998, the registrant had outstanding 15,247,543 shares of
common stock having a par value of $2 per share.

Continued

DOCUMENTS INCORPORATED BY REFERENCE

Part of Form 10-K into
DOCUMENT which Document is Incorporated
-------- ------------------------------

Annual Report to Stockholders for fiscal year
ended December 31, 1997 I & II

Definitive proxy statement for the 1998 Annual
Meeting of Stockholders to be held on April 29, 1998 III

FORM 10-K
1997

INDEX

PART I PAGE

Item 1. Business.
General I-2
Statistical Disclosure I-11

Item 2. Properties. I-12

Item 3. Legal Proceedings. I-12

Item 4. Submission of Matters to a Vote of Security Holders. I-12

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters. II-1

Item 6. Selected Financial Data. II-1

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. II-1

Item 7.A. Quantitative and Qualitative Disclosures About Market Risk. II-1

Item 8. Financial Statements and Supplementary Data. II-1

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. II-1

PART III

Item 10. Directors and Executive Officers of the Registrant. III-1

Item 11. Executive Compensation. III-1

Item 12. Security Ownership of Certain Beneficial Owners and Management. III-1

Item 13. Certain Relationships and Related Transactions. III-1

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. IV-1

Signatures IV-2

Index to Exhibits IV-5

I-1

PART I

ITEM 1. BUSINESS
GENERAL

F.N.B. Corporation (the Corporation) was formed in 1974 as the holding
company of its then sole subsidiary, First National Bank of Mercer County. As of
December 31, 1997, the Corporation owned and operated eight banks and one
consumer finance company in Pennsylvania, southwestern Florida, eastern Ohio and
western New York. During 1992, First National Bank of Mercer County completed an
acquisition of ten offices of the former The First National Bank of Pennsylvania
and three offices of Marine Bank. At the same time, First National Bank of
Mercer County changed its name to First National Bank of Pennsylvania (First
National). During 1997, the Corporation acquired Southwest Banks, Inc., a bank
holding company headquartered in Naples, Florida and West Coast Bancorp, Inc., a
bank holding company headquartered in Cape Coral, Florida. The Corporation
continued to establish a presence in the southwestern Florida market area by
acquiring additional banks in that area, including Indian Rocks National Bank on
October 17, 1997 and Mercantile Bank of Southwest Florida on November 20, 1997.
On January 20, 1998, the Corporation completed its merger with West Coast Bank
(West Coast), located in Sarasota, Florida. The merger was accounted for as a
pooling of interests. In addition, on February 2, 1998, the Corporation
announced the signing of a definitive merger agreement to acquire Seminole Bank
in Seminole, Florida. The merger will be accounted for as a pooling of interests
and is expected to close during the second quarter of 1998, pending regulatory
and shareholder approval.

The Corporation regularly evaluates the potential acquisition of, and holds
discussions with, various potential acquisition candidates and as a general rule
the Corporation publicly announces such acquisitions only after a definitive
agreement has been reached.

The Corporation, through its subsidiaries, provides a full range of
financial services, principally to consumers and small- to medium-size
businesses in its market areas. The Corporation's business strategy has been to
focus primarily on providing quality, community-based financial services adapted
to the needs of each of the markets it serves. The Corporation has emphasized
its community orientation by preserving the names and local boards of directors
of its subsidiaries, by allowing its subsidiaries certain autonomy in
decision-making and thus enabling them to respond to customer requests more
quickly, and by concentrating on transactions within its market areas. However,
while the Corporation has sought to preserve the identities and autonomy of its
subsidiaries, it has established centralized legal, loan review, accounting,
investment, audit and data processing functions. The centralization of these
processes has enabled the Corporation to maintain consistent quality of these
functions and to achieve certain economies of scale.

The Corporation's lending philosophy is to minimize credit losses by
following strict credit approval standards (which include independent analysis
of realizable collateral value), diversifying its loan portfolio by industry and
borrower and conducting ongoing review and management of the loan portfolio. The
Corporation is an active residential mortgage lender, and its commercial loans
are generally to established businesses within its market areas. The Corporation
does not have a significant amount of construction loans and has no highly
leveraged transaction loans.

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No material portion of the deposits of the Corporation's bank subsidiaries
has been obtained from a single or small group of customers, and the loss of any
customer's deposits or a small group of customers' deposits would not have a
material adverse effect on the business of the Corporation. The majority of the
deposits held by the Corporation's bank subsidiaries have been generated within
the respective subsidiary's market area.

Following is information as of December 31, 1997 for the Corporation's bank
and consumer finance subsidiaries, including West Coast (including the year
established and location of principal office for each). All subsidiaries are
wholly-owned by the Corporation (dollars in thousands).

NUMBER
TOTAL TOTAL OF
BANK SUBSIDIARIES: ASSETS DEPOSITS OFFICES
------- --------- -------

First National Bank of Pennsylvania (Est. 1864)
Hermitage, Pennsylvania........................ $1,098,275 $ 962,332 34
First National Bank of Naples (Est. 1988)
Naples, Florida................................ 584,692 459,068 9
Cape Coral National Bank (Est. 1994)
Cape Coral, Florida............................ 251,850 226,731 4
Metropolitan National Bank (Est. 1922)
Youngstown, Ohio............................... 241,896 218,744 8
Reeves Bank (Est. 1868)
Beaver Falls, Pennsylvania..................... 147,232 134,231 9
Indian Rocks National Bank (Est. 1986)
Largo, Florida................................. 99,896 86,221 3
First National Bank of Fort Myers (Est. 1989)
Fort Myers, Florida............................ 83,997 77,819 2
First County Bank, N.A. (Est. 1987)
Chardon, Ohio.................................. 50,125 45,856 2
---------- ---------- --
$2,557,963 $2,211,002 71
========== ========== ==
CONSUMER FINANCE SUBSIDIARY:
Regency Finance Company (Est. 1927)
Hermitage, Pennsylvania........................ $ 91,304 35
========== ==

CONSUMMATED MERGER:
West Coast Bank (Est. 1988)
Sarasota, Florida.............................. $ 107,386 $ 91,251 2
========== ========== ==

PENDING MERGER:
Seminole Bank (Est. 1985)
Seminole, Florida.............................. $ 93,650 $ 82,863 4
========== ========== ==

The Corporation has five other subsidiaries, Penn-Ohio Life Insurance
Company, Est. 1981 (Penn-Ohio), F.N.B. Investment Corporation, Est. 1997 (F.N.B.
Investment) Customer Service Center of F.N.B., L.L.C., Est. 1996 (Customer
Service), Mortgage Service Corporation, Est. 1944 (Mortgage Service), and F.N.B.
Building Corporation, Est. 1987 (F.N.B. Building). Penn-Ohio underwrites, as a
reinsurer, credit life and accident and health insurance sold by the
Corporation's subsidiaries. F.N.B. Investment holds equity securities and other
assets for the holding company. Customer Service provides data processing and
other services to the affiliates of the Corporation. Mortgage Service services
mortgage loans for unaffiliated financial institutions and F.N.B. Building owns
real estate that is leased to certain affiliates.

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OPERATIONS OF THE BANK SUBSIDIARIES

The Corporation's bank subsidiaries offer services traditionally offered by
full-service commercial banks, including commercial and individual demand and
time deposit accounts, commercial, mortgage and individual installment loans,
credit card services through correspondent banks, night depository, automated
teller services, computer services, safe deposit boxes, money order services,
travelers checks, government savings bonds, food stamp sales and utility bill
payments.

In addition, First National operates a trust department which offers a
broad range of personal and corporate fiduciary services, including the
administration of decedent and trust estates. As of December 31, 1997, trust
assets under management at First National totaled $290.1 million.

OPERATIONS OF THE CONSUMER FINANCE SUBSIDIARY

The Corporation's consumer finance subsidiary is involved principally in
making personal installment loans to individuals and purchasing installment
sales finance contracts from retail merchants. Such activity is primarily funded
through the sale of the Corporation's subordinated notes at its branch offices.

REGULATION AND SUPERVISION

Bank holding companies, banks and consumer finance companies are
extensively regulated under both federal and state law. The following summary
information describes statutory or regulatory provisions, it is qualified by
reference to the particular statutory and regulatory provisions. Any change in
applicable law or regulation may have a material effect on the business and
prospects of the Corporation and its subsidiaries.

The regulation and examination of the Company and its subsidiaries are
designed primarily for the protection of depositors and not the Corporation or
its stockholders.

BANK HOLDING COMPANIES

The Corporation is registered as a bank holding company under the Bank
Holding Company Act of 1956 (BHCA) and, as such, is subject to regulation by the
Federal Reserve Board (FRB). As a bank holding company, the Corporation is
required to file with the FRB an annual report and such additional information
as the FRB may require pursuant to the BHCA. The FRB may also make examinations
of the Corporation.

The BHCA requires the prior approval of the FRB in any case where a bank
holding company proposes to acquire direct or indirect ownership or control of
more than 5% of the voting shares of any bank (unless it owns a majority of such
bank's voting shares) or otherwise to control a bank or to merge or consolidate
with any other bank holding company. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 authorizes the FRB to permit a bank holding
company that meets all applicable capital requirements to acquire control, or
substantially all of the assets, of a bank located in another state that is not
the bank holding company's home state, regardless of whether the other state
prohibits such transaction.

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The BHCA also prohibits a bank holding company, with certain exceptions,
from acquiring more than 5% of the voting shares of any company that is not a
bank and from engaging in any business other than banking or managing or
controlling banks. Under the BHCA, the FRB is authorized to approve the
ownership of shares by a bank holding company in any company, the activities of
which the Federal Reserve has determined to be so closely related to banking or
to managing or controlling banks as to be a proper incident thereto. The FRB has
by regulation determined that certain activities are closely related to banking
within the meaning of the BHCA. These activities, which are listed in Regulation
Y of the FRB regulations, include: operating a mortgage company, finance
company, credit card company or factoring company; performing certain data
processing operations; providing investment and finance advice; and acting as an
insurance agent for certain types of credit-related insurance.

Activities which the FRB has approved by order in connection with specific
applications by bank holding companies include the operation of a credit card
bank or other non-bank banks, certain expanded student loan servicing
activities, the buying and selling of gold and silver bullion and silver coin
for the account of customers and for itself, the provision of certain financial
office services, the printing and sale of checks and similar documents,
underwriting and dealing in commercial paper, certain municipal revenue bonds
and one to four family mortgage backed securities, subject to certain
conditions, and underwriting and dealing in corporate debt or equity securities,
subject to certain conditions. Bank holding companies also are permitted to
acquire savings associations subject to the applicable requirements of the BHCA.

In approving acquisitions by bank holding companies of banks and companies
engaged in banking-related activities, the FRB considers a number of factors,
including the expected benefits to the public, such as greater convenience,
increased competition or gains in efficiency, as weighed against the risks of
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices. The FRB
is also empowered to differentiate between new activities and activities
commenced through acquisition of a going concern.

Bank holding companies and their subsidiary banks are also subject to the
provisions of the Community Reinvestment Act of 1977 (CRA). Under the terms of
the CRA, the FRB (or other appropriate bank regulatory agency) is required, in
connection with its examination of a financial institution, to assess the
financial institution's record in meeting the credit needs of the communities
served by the financial institution, including low and moderate-income
neighborhoods. Further, such assessment is also required of any financial
institution which has applied to (i) obtain a federally-regulated financial
institution charter; (ii) obtain deposit insurance coverage for a newly
chartered institution; (iii) establish a new branch office that will accept
deposits; (iv) relocate an office; or (v) merge or consolidate with, or acquire
the assets or assume the liabilities of, a federally-regulated financial
institution. In the case of a bank holding company applying for approval to
acquire a bank, savings and loan, or other bank holding company, the FRB will
assess the record of each subsidiary of the applicant bank holding company, and
such records may be the basis for denying the application or imposing conditions
in connection with approval of the application.

BANKS

The Corporation's bank subsidiaries are supervised and regularly examined
by the Office of the Comptroller of Currency (OCC), the Federal Deposit
Insurance Corporation (FDIC), the FRB, the Pennsylvania Department of Banking
and the Florida Department of Banking and Finance. The various laws and
regulations administered by the regulatory agencies affect corporate practices,
such as payment of dividends, incurring debt and acquisition of financial
institutions and other companies, and affect business practices, such as payment
of interest on deposits, the charging of interest on loans, types of business
conducted and location of offices.

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CONSUMER FINANCE SUBSIDIARY

The Corporation's consumer finance subsidiary is subject to regulation
under Pennsylvania, Ohio and New York state laws which require, among other
things, that it maintain licenses for consumer finance operations in effect for
each of its offices. Representatives of the Pennsylvania Department of Banking,
the Ohio Division of Consumer Finance and the State of New York Banking
Department periodically visit the offices of the consumer finance subsidiary and
conduct extensive examinations in order to determine compliance with such laws
and regulations. Such examinations include a review of loans and the collateral
thereof, as well as a check of the procedures employed for making and collecting
loans. Additionally, the consumer finance subsidiary is subject to certain
federal laws which require that certain information relating to credit terms be
disclosed to customers and afford customers in certain instances the right to
rescind transactions.

LIFE INSURANCE SUBSIDIARY

Penn-Ohio is subject to examination on a triennial basis by the Arizona
Department of Insurance. Representatives of the Department of Insurance will
periodically determine whether Penn-Ohio has maintained required reserves,
established adequate deposits under a reinsurance agreement and complied with
reporting requirements under Arizona statutes.

GOVERNMENTAL POLICIES

The operations of the Corporation and its subsidiaries are affected not
only by general economic conditions, but also by the policies of various
regulatory authorities. In particular, the FRB regulates money and credit and
interest rates in order to influence general economic conditions. These policies
have a significant influence on overall growth and distribution of loans,
investments and deposits and affect interest rates charged on loans or paid for
time and savings deposits. FRB monetary policies have had a significant effect
on the operating results of all financial institutions in the past and may
continue to do so in the future.

FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT (FDICIA)

FDICIA was designed to bolster the deposit insurance fund, tighten bank
regulation and trim the scope of federal deposit insurance as summarized below.

FDIC Funding - FDICIA bolstered the bank deposit insurance fund with $70.0
billion in borrowing authority and increased to $30.0 billion from $5.0 billion
the amount the FDIC can borrow from the U.S. Treasury to cover the costs of
potential bank failures.

Bank Regulation - Under FDICIA, regulatory supervision is linked to bank
capital. Regulators have set five capital levels at which insured depository
institutions will be "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." FDICIA established a framework for supervisory actions
regarding insured institutions and their holding companies that are not well or
adequately capitalized.

FDICIA requires increased supervision for banks not rated in one of the two
highest categories under the "CAMELS" composite bank rating system. The FDIC is
authorized to charge banks for regular and special examinations. Further, FDICIA
mandates certain limits on real estate lending by banks and tightens bank
auditing requirements.

I-6

The federal bank regulatory agencies are required by FDICIA to adopt
uniform capital and accounting rules. The accounting rules require supplemental
disclosure in reports to the banking agencies of all assets and liabilities,
including contingent assets and liabilities and, to the extent feasible, of the
estimated fair market valuation of assets and liabilities.

As mandated by Section 132 of FDICIA, the federal bank regulatory agencies
issued regulations which prescribe minimum safety and soundness standards with
respect to internal control, internal audit, loan documentation, credit
underwriting, interest rate exposure, asset growth and quality, earnings,
compensation arrangements and stock valuation. Institutions failing to meet
these safety and soundness standards will be required to submit corrective plans
and will be subject to sanctions for failure to submit or comply with a plan.

The Community Development and Regulatory Improvement Act of 1994 amended
section 132 of FDICIA to permit the regulatory agencies to implement the safety
and soundness standards relative to asset quality, earnings and stock valuation
by regulation or guidelines. The agencies will now be permitted to decide
whether or not to compel institutions that fail to meet these standards to
submit a compliance plan. Finally, depository institution holding companies are
no longer covered under Section 132 of FDICIA.

FDICIA also provided for certain consumer and low and moderate income
lending and deposit programs.

Deposit Insurance - The legislation also reduced the scope of federal
deposit insurance. The FDIC's ability to reimburse uninsured deposits (those
over $100,000 and foreign deposits) was sharply limited beginning January 1995.
The FRB's ability to finance banks with extended loans from its discount window
was restricted, beginning December 1993. In addition, only the best capitalized
banks will be able to offer insured broker deposits or to insure accounts
established under employee pension plans.

LIMITS ON DIVIDENDS AND OTHER PAYMENTS

The parent company is a legal entity separate and distinct from its
subsidiaries. Most of the parent company's revenues result from dividends paid
to the parent company by the subsidiaries. The right of the parent company, and
consequently the right of creditors and stockholders of the Corporation, to
participate in any distribution of the assets or earnings of any subsidiary
through the payment of such dividends or otherwise is necessarily subject to the
prior claims of creditors of the subsidiary, except to the extent that claims of
the parent company in its capacity as a creditor may be recognized. Moreover,
there are various legal and regulatory limitations applicable to the payment of
dividends by the subsidiaries as well as by the Corporation to its stockholders.
Under federal law, the subsidiaries may not, subject to certain limited
exceptions, make loans or extensions of credit to, or investments in the
securities of, the Corporation or take securities of the Corporation as
collateral for loans to any borrower. The subsidiaries are also subject to
collateral security requirements for any loans or extensions of credit permitted
by such exceptions.

I-7

The subsidiaries are subject to various statutory and regulatory
restrictions on their ability to pay dividends to the parent company. Under
applicable federal and state statutes and regulations, the dividends that may be
paid to the parent company by its subsidiaries without prior regulatory approval
are subject to limitations. In the case of national banks, all subsidiaries
except Reeves and West Coast Bank, prior approval of the OCC is required if the
total of all dividends declared in any calendar year will exceed net profits (as
defined and interpreted by the OCC) for that year combined with retained net
profits (as defined) for the two preceding calendar years. As a Pennsylvania
state-chartered institution, Reeves may pay dividends only if they are solvent
and would not be rendered insolvent by the dividend payments, and only from
unrestricted and unreserved earned surplus and, under certain circumstances,
capital surplus. Reeves must also maintain a leverage ratio of 6.00% after
paying dividends. As a Florida state-chartered institution, West Coast Bank may
also pay dividends without prior regulatory approval, subject to the dividends
for the calendar year not exceeding net profits for that year combined with
retained profits for the preceding two calendar years.

In addition, the OCC, in the case of the Corporation's national banks, and
the FDIC, in the case of Reeves and the FRB in the case of West Coast Bank, have
authority to prohibit banks from engaging in unsafe and unsound banking
practices. The payment of a dividend by a bank could, depending on the financial
condition of such bank and other factors, be considered an unsafe and unsound
banking practice. The OCC has indicated its view that it generally would be an
unsafe and unsound practice to pay dividends except out of current operating
earnings. The ability of the subsidiaries to pay dividends is, and is expected
to continue to be, influenced by regulatory policies and capital guidelines.
(See also "Stockholders' Equity" footnote in the Notes to Consolidated Financial
Statements, which is incorporated by reference to the Corporation's Annual
Report to Stockholders).

CAPITAL REQUIREMENTS

The FRB has adopted risk-based capital guidelines applicable to bank
holding companies. The primary indicators relied on by the FRB and other bank
regulators in measuring strength of capital position are the core capital, total
risk-based capital and leverage ratios.

Core capital consists of common and qualifying preferred stockholders'
equity less non-qualifying intangibles. Total capital consists of core capital,
qualifying subordinated debt and a portion of the allowance for loan losses.
Risk-based capital ratios are calculated with reference to risk-weighted assets
which consist of both on-and off- balance sheet risks. The regulatory minimums
are 4.00% for the core capital ratio and 8.00% for the total risk-based capital
ratio. The Corporation's core capital and total risk-based capital to
risk-weighted assets ratios as of December 31, 1997 were 12.10% and 13.91%,
respectively. (See also "Regulatory Matters" footnote in the Notes to
Consolidated Financial Statements, which is incorporated by reference to the
Corporation's Annual Report to Stockholders).

In addition, the FRB has established minimum leverage ratio (core capital
to quarterly average assets less non-qualifying intangibles) guidelines for bank
holding companies. These guidelines provide for a minimum ratio of 4.00% for
bank holding companies that meet certain specified criteria, including that they
have the highest regulatory rating. All other bank holding companies are
required to maintain a leverage ratio of 4.00% plus an additional cushion of at
least 100 to 200 basis points. The Corporation's leverage ratio as of December
31, 1997 was 8.50%. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels,
without significant reliance on intangible assets.

I-8

Each bank subsidiary is subject to similar capital requirements adopted by
its primary regulator.

Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
However, management is unable to predict whether higher capital ratios would be
imposed and, if so, at what levels and on what schedule.

Under FRB policy, a bank holding company is required to serve as a source
of financial and managerial strength to its subsidiary banks and may not conduct
its operations in an unsafe or unsound manner. In addition, it is the FRB's
policy that, in serving as a source of strength to its subsidiary banks, a bank
holding company should stand ready to use available resources to provide
adequate capital funds to its subsidiary banks during periods of financial
stress or adversity, in circumstances where it might not do so absent such
policy, and should maintain the financial flexibility and capital-raising
capacity to obtain additional resources for assisting its subsidiary banks. The
failure of a bank holding company to serve as a source of strength to its
subsidiary banks would generally be considered by the FRB to be an unsafe and
unsound banking practice, a violation of FRB regulations, or both.

FDIC INSURANCE ASSESSMENTS

The Corporation's banking subsidiaries are subject to FDIC deposit
insurance assessments for the Bank Insurance Fund (BIF) and Savings Association
Insurance Fund (SAIF). Financial Institutions Reform, Recovery and Enforcement
Act (FIRREA) authorized the FDIC to set the annual premium for banks and savings
associations as high as determined to be necessary to assure stability of the
insurance funds. FDIC deposit insurance premium rates have been determined
through a risk-based assessment which takes into consideration the capital
rating (i.e. "undercapitalized", "adequately capitalized" or "well capitalized")
assigned to the institution by the federal regulators. Each of the banking
affiliates' most recent capital rating assignment has been that of "well
capitalized."

FIRREA

As a result of the enactment of the FIRREA on August 9, 1989, a depository
institution insured by the FDIC can be held liable for any loss incurred, or
reasonably expected to be incurred, by the FDIC after August 9, 1989 in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to a commonly controlled
FDIC-insured depository institution in danger of default. "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions indicating
that a "default" is likely to occur in the absence of regulatory assistance.
Liability of any subsidiary under this "cross-guarantee" provision could have a
material adverse effect on the financial condition of any assessed subsidiary
and the Corporation.

OMNIBUS CONSOLIDATED APPROPRIATIONS ACT, FOR FISCAL YEAR 1997 (OMNIBUS ACT)

The Omnibus Act requires commercial banks to make contributions to the SAIF
and amended the Bank Holding Company Act to simplify certain nonbank application
procedures for "well capitalized" banking organizations. Additionally, the
Omnibus Act amended certain banking laws governing the operations of insured
depository institutions to provide relief to commercial banks with respect to
lender liability, environmental liability, loans to executive officers, officer
and director interlocks and composition of bank audit committees.

I-9

MARKET AREA AND COMPETITION

The Corporation, through its subsidiaries, operated 106 offices in 34
counties in Pennsylvania, southwestern Florida, eastern Ohio and western New
York at December 31, 1997. The economies of the primary market areas in which
the Corporation's Pennsylvania and Ohio subsidiaries operate have evolved during
the past decade from ones dominated by heavy industry to ones which have a more
diversified mix of light manufacturing, service and distribution industries.
This area is served by Interstate Routes 90, 76, 79 and 80, and is located at
the approximate midpoint between New York City and Chicago. The area is also
close to the Great Lakes shipping port of Erie and the Greater Pittsburgh
International Airport. The Corporation's Florida subsidiaries operate in a four
county area represented by high growth and median family income levels. The
industries served in this market include a diversified mix of tourism,
construction, services, light manufacturing, distribution and agriculture. The
market extends north to Tampa and south through Naples and is served by
Interstate 75 and U.S. Highway 41.

The Corporation's subsidiaries compete with a large number of other
financial institutions, such as commercial banks, savings banks, savings and
loan associations, insurance companies, mortgage banking companies, consumer
finance companies, credit unions and commercial finance and leasing companies,
many of which have greater resources than the Corporation, for deposits, loans
and service business. Money market mutual funds, brokerage houses and similar
institutions currently provide many of the financial services offered by the
Corporation's subsidiaries.

In the consumer finance subsidiary's market areas, the active competitors
include banks, credit unions and national, regional and local consumer finance
companies, some of which have substantially greater resources than that of the
consumer finance subsidiary. The ready availability of consumer credit through
charge accounts and credit cards constitutes additional competition. The
principal methods of competition include the rates of interest charged for
loans, the rates of interest paid to obtain funds and the availability of
customer services.

With reciprocal interstate banking, the Corporation also faces the prospect
of additional competitors entering its markets as well as additional competition
in its efforts to acquire other subsidiaries and branches throughout
Pennsylvania, Florida, Ohio and in other neighboring states. (See "Regulation
and Supervision.")

EMPLOYEES

As of February 28, 1998, the Corporation and its subsidiaries, including
West Coast, had 1,124 full-time and 259 part-time employees. Management of the
Corporation considers its relationship with its employees to be satisfactory.

MERGERS, ACQUISITIONS AND DIVESTITURE

See "Mergers, Acquisitions and Divestiture" footnote in the Notes to
Consolidated Financial Statements, which is incorporated by reference to the
Corporation's Annual Report to Stockholders.

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STATISTICAL DISCLOSURE

Statistical disclosure information regarding the Corporation is included in
the Management's Discussion and Analysis, which is incorporated by reference to
the Corporation's Annual Report to Stockholders (see Part II, Item 7 below). The
following information is contained therein:

I. Distribution of Assets, Liabilities and Stockholders' Equity; Interest
Rates and Interest Differential

II. Investment Portfolio

III. Loan Portfolio

IV. Summary of Loan Loss Experience

V. Deposits

VI. Return on Equity and Assets

VII. Short-Term Borrowings

I-11

ITEM 2. PROPERTIES

The Corporation opened a new six-story building in Hermitage, Pennsylvania
to serve as its corporate headquarters and share with its lead banking
affiliate, First National. The operations of the Corporation and First National
are currently conducted at the new headquarters building and the Hermitage
Square office location in Hermitage, Pennsylvania.

The banking and consumer finance subsidiaries' branch offices are located
in 24 counties in Pennsylvania, 6 counties in eastern Ohio, 3 counties in
southwestern Florida and 1 county in western New York. At December 31, 1997, the
Corporation's subsidiaries owned 52 of the Corporation's 106 branch locations
and leased the remaining 54 branch locations under operating leases expiring at
various dates through the year 2010. For additional information regarding the
lease commitments see the Premises and Equipment footnote in the Annual
Report to Shareholders.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Corporation or
any of its subsidiaries is a party, or of which any of their property is the
subject, except ordinary routine proceedings which are incidental to the
ordinary conduct of business. In the opinion of management, pending legal
proceedings will not have a material adverse effect on the consolidated
financial position of the Corporation and its subsidiaries.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of 1997.

I-12

PART II

Information relating to Items 5, 6, 7 and 8 is provided in the
Corporation's 1997 Annual Report to Stockholders under the captions and on the
pages indicated below, and is incorporated herein by reference:

PAGES IN 1997
ANNUAL REPORT
CAPTION IN 1997 ANNUAL REPORT TO STOCKHOLDERS TO STOCKHOLDERS

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 40

ITEM 6. SELECTED FINANCIAL DATA 26

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28

ITEM 7.A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 31-33

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 1-25,27

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None

II-1

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to directors of the Corporation is provided in the
Corporation's definitive proxy statement filed with the Securities and Exchange
Commission in connection with its annual meeting of stockholders to be held
April 29, 1998. Such information is incorporated herein by reference.
Information relating to executive officers of the Corporation is provided in
Part I.

ITEM 11. EXECUTIVE COMPENSATION

Information relating to this item is provided in the Corporation's
definitive proxy statement filed with the Securities and Exchange Commission in
connection with its annual meeting of stockholders to be held April 29, 1998.
Such information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

III-1

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) 1. FINANCIAL STATEMENTS

The following consolidated financial statements of F.N.B. Corporation
and subsidiaries and report of independent auditors, included in the
Corporation's 1997 Annual Report to Stockholders, are incorporated
herein by reference:

PAGES IN 1997
ANNUAL REPORT
TO STOCKHOLDERS

Consolidated Balance Sheet 1
Consolidated Income Statement 2
Consolidated Statement of Stockholders' Equity 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5 - 25
Report of Independent Auditors 25
Quarterly Earnings Summary 27

(A) 2. FINANCIAL STATEMENT SCHEDULES

All Schedules are omitted because they are not applicable.

(A) 3. EXHIBITS

The exhibits filed or incorporated by reference as a part of this
report are listed in the Index to Exhibits which appears at page IV-5
and are incorporated by reference.

(B) REPORTS ON FORM 8-K

A Report on Form 8-K, dated February 13, 1998, was filed by the
Corporation. The Form 8-K included Audited Supplemental Consolidated
Financial Statements for the years ended December 31, 1996, 1995 and
1994 with Report of Independent Auditors and Management's Discussion
and Analysis giving effect to the merger of the Corporation and West
Coast Bank on a pooling-of-interests basis.

IV-1

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

F.N.B. CORPORATION

By /s/ PETER MORTENSEN
-----------------------------------
Peter Mortensen, Chairman and Chief
Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

/s/ PETER MORTENSEN
- - ---------------------------------- Chairman, Chief Executive February 24, 1998
Peter Mortensen Officer and Director
(Principal Executive Officer)

/s/ STEPHEN J. GURGOVITS
- - ---------------------------------- Vice Chairman and Director February 24, 1998
Stephen J. Gurgovits

/s/ GARY L. TICE
- - ---------------------------------- President, Chief Operating February 24, 1998
Gary L. Tice Officer and Director

/s/ WILLIAM J. RUNDORFF
- - ---------------------------------- Executive Vice President February 24, 1998
William J. Rundorff

/s/ JOHN D. WATERS
- - ---------------------------------- Vice President and Chief February 24, 1998
John D. Waters Financial Officer (Principal
Financial and Accounting
Officer)

- - ---------------------------------- Director
W. Richard Blackwood

/s/ WILLIAM B. CAMPBELL
- - ---------------------------------- Director February 24, 1998
William B. Campbell

/s/ CHARLES T. CRICKS
- - ---------------------------------- Director February 24, 1998
Charles T. Cricks

/s/ HENRY M. EKKER
- - ---------------------------------- Director February 24, 1998
Henry M. Ekker

IV-2

- - ---------------------------------- Director
Thomas C. Elliott

/s/ THOMAS W. HODGE
- - ---------------------------------- Director February 24, 1998
Thomas W. Hodge

- - ---------------------------------- Director
James S. Lindsay

/s/ PAUL P. LYNCH
- - ---------------------------------- Director February 24, 1998
Paul P. Lynch

- - ---------------------------------- Director
Edward J. Mace

- - ---------------------------------- Director
Robert S. Moss

- - ---------------------------------- Director
Richard C. Myers

- - ---------------------------------- Director
John R. Perkins

- - ---------------------------------- Director
William A. Quinn

- - ---------------------------------- Director
George A. Seeds

/s/ WILLIAM J. STRIMBU
- - ---------------------------------- Director February 24, 1998
William J. Strimbu

/s/ ARCHIE O. WALLACE
- - ---------------------------------- Director February 24, 1998
Archie O. Wallace

- - ---------------------------------- Director
Joseph M. Walton

/s/ JAMES T. WELLER
- - ---------------------------------- Director February 24, 1998
James T. Weller

IV-3

/s/ ERIC J. WERNER
- - ---------------------------------- Director February 24, 1998
Eric J. Werner

/s/ R. BENJAMIN WILEY
- - ---------------------------------- Director February 24, 1998
R. Benjamin Wiley

/s/ DONNA C. WINNER
- - ---------------------------------- Director February 24, 1998
Donna C. Winner

IV-4

INDEX TO EXHIBITS

The following exhibits are filed or incorporated by reference as part of this
report:

3.1. Restated Articles of Incorporation of the Corporation as currently
in effect and any amendments thereto. (incorporated by reference to
Exhibit 3.1. of the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).

3.2. By-laws of the Corporation as currently in effect. (incorporated by
reference to Exhibit 4 of the Corporation's Form 10-Q for the
quarter ended June 30, 1994).

4 The rights of holders of equity securities are defined in portions
of the Restated Articles of Incorporation and By-laws. The Restated
Articles of Incorporation are incorporated by reference to Exhibit
3.1. of the registrant's Form 10-K for the year ended December 31,
1996. The By-laws are incorporated by reference to Exhibit 4 of the
registrant's Form 10-Q for the quarter ended June 30, 1994. A
designation statement defining the rights of F.N.B. Corporation
Series A - Cumulative Convertible Preferred Stock is incorporated by
reference to Form S-14, Registration Statement of F.N.B.
Corporation, File No. 2-96404. A designation statement defining the
rights of F.N.B. Corporation Series B - Cumulative Convertible
Preferred Stock is incorporated by reference to Exhibit 4 of the
registrant's Form 10-Q for the quarter ended June 30, 1992. The
Corporation agrees to furnish to the Commission upon request copies
of all instruments not filed herewith defining the rights of holders
of long-term debt of the Corporation and its subsidiaries.

10.1. Form of agreement regarding deferred payment of directors' fees by
First National Bank of Pennsylvania. (incorporated by reference to
Exhibit 10.1. of the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993).

10.2. Form of agreement regarding deferred payment of directors' fees by F.N.B.
Corporation. (incorporated by reference to Exhibit 10.2. of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993).

10.3. Form of Deferred Compensation Agreement by and between First
National Bank of Pennsylvania and four of its executive officers.
(incorporated by reference to Exhibit 10.3. of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993).

10.4. Revised and Restated Amendment No. 2 to Employment Agreement between F.N.B.
Corporation and Peter Mortensen. (incorporated by reference to Exhibit 10.5.
of the Corporation's Form 10-Q for the quarter ended September 30, 1996).

10.5. Employment Agreement between F.N.B. Corporation and Stephen J. Gurgovits.
(incorporated by reference to exhibit 10.6 of the Corporation's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990).

10.6. Employment Agreement between F.N.B. Corporation and William J. Rundorff.
(incorporated by reference to exhibit 10.9 of the Corporation's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991). Amendment No. 2 to
Employment Agreement. (incorporated by reference to Exhibit 10.8. of the
Corporation's Annual Report on Form 10-K for the fiscal year ended December 31,
1995).

IV-5

10.7. Basic Retirement Plan (formerly the Supplemental Executive
Retirement Plan) of F.N.B. Corporation effective January 1, 1992.
(incorporated by reference to Exhibit 10.9. of the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993).

10.8. F.N.B. Corporation 1990 Stock Option Plan as amended effective February 2,
1996. (incorporated by reference to Exhibit 10.10. of the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).

10.9. F.N.B. Corporation Restricted Stock Bonus Plan dated January 1, 1994.
(incorporated by reference to Exhibit 10.11. of the Corporation's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993).

10.10. Employment Agreement between F.N.B. Corporation and John D. Waters.
(incorporated by reference to Exhibit 10.13. of the Corporation's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995).

10.11. F.N.B. Corporation Restricted Stock and Incentive Bonus Plan. (incorporated by
reference to Exhibit 10.13. of the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).

10.12. F.N.B. Corporation 1996 Stock Option Plan. (incorporated by reference to
Exhibit 10.13. of the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995).

10.13. F.N.B. Corporation Director's Compensation Plan. (incorporated by reference to
Exhibit 10.13. of the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995).

13 Annual Report to Stockholders. (filed herewith).

21 Subsidiaries of the Registrant. (filed herewith).

23.1 Consent of Ernst & Young LLP, Independent Auditors. (filed herewith).

23.2 Consent of Hill, Barth & King, Independent Auditors. (filed herewith).

23.3 Consent of Coopers & Lybrand, Independent Auditors. (filed herewith).

27 Financial Data Schedule. (filed herewith).

99.1 Report of Independent Auditors, Hill, Barth & King, Inc. for the 1996
and 1995 audits of Southwest Banks, Inc. (filed herewith).

99.2 Report of Independent Auditors, Coopers & Lybrand L.L.P., for the
1996 and 1995 audits of West Coast Bancorp, Inc. (Filed herewith).

IV-6