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Florida		6711		25-1255406
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

Frederick W. Dreher, Esq.		Clinton W. Kemp, Esq.
John W. Kauffman, Esq.		Jeffrey P. Waldron, Esq.
Duane Morris LLP		Stevens & Lee P.C.
30 South 17th Street		25 N. Queen Street, Suite 602
Philadelphia, PA 19103		Lancaster, PA 17608
(215) 979-1234		(717) 291-1031

Proposed Maximum

Proposed Maximum

Amount of

Title of Each Class of

Amount

Offering

Aggregate

Registration

Securities to be Registered

to be Registered(1)

Price per Unit

Offering Price

Fee

Common Stock, $.01 par value

4,290,000 shares

N/A

$17.00(2)

$7,803.51

(1)	Reflects the estimated maximum number of shares of the Registrant’s common stock that may be issued in connection with the proposed merger of The Legacy Bank with and into the Registrant’s wholly owned subsidiary.
(2)	Computed, in accordance with Rules 457(c) and 457(f)(1), as the product of (x) the average of the high and low prices of the common stock of The Legacy Bank as reported on January 31, 2006 multiplied by (y) the estimated maximum number of shares of The Legacy Bank common stock to be received by the Registrant in exchange for the securities registered hereby.

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The information in this proxy statement/ prospectus is not complete and may be changed. We may not issue the shares of FNB common stock to be issued in connection with the merger described in this proxy statement/ prospectus until the registration statement filed with the SEC is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Any representation to the contrary is a criminal offense.

	Sincerely,
	George H. Groves,
	Chairman and Chief Executive Officer
	Legacy Bank

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	(1) To consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of December 21, 2005, among F.N.B. Corporation (“FNB”), First National Bank of Pennsylvania (“FNB Bank”) and us pursuant to which we will merge with and into FNB Bank as described in the accompanying proxy statement/ prospectus and you will be entitled to receive cash or shares of FNB common stock or a combination of both;
	(2) To consider and vote upon a proposal to grant discretionary authority to adjourn the special meeting if necessary to permit further solicitation of proxies if there are not sufficient votes at the time of our special meeting to approve and adopt the merger agreement; and
	(3) To transact such other business as may be properly presented for action at our special meeting and any adjournment, postponement or continuation of our special meeting.

	By Order of the Board of Directors,
	George H. Groves,
	Chairman and Chief Executive Officer

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	F.N.B. Corporation
	Attn: Corporate Secretary
	One F.N.B. Boulevard
	Hermitage, Pennsylvania 16148
	(724) 981-6000

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				Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND OUR SPECIAL MEETING					iii
SUMMARY					1
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF FNB					8
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF LEGACY					10
SELECTED CONSOLIDATED UNAUDITED PRO FORMA FINANCIAL INFORMATION					11
MANAGEMENT’S DISCUSSION AND ANALYSIS OF LEGACY’S FINANCIAL CONDITION AND RESULTS OF OPERATIONS					17
RISK FACTORS RELATING TO THE MERGER					43
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS					48
OUR SPECIAL MEETING					49
	General				49
	When and Where Our Special Meeting Will Be Held				49
	Matters to Be Considered				49
	Record Date; Shares Outstanding and Entitled to Vote				49
	Quorum				49
	Shareholder Vote Required				50
	Appraisal Rights				50
	Director and Executive Officer Voting				50
	Proxies				50
	Recommendation of Our Board of Directors				52
	Attending Our Special Meeting				52
	Questions and Additional Information				52
INFORMATION ABOUT LEGACY AND FNB					53
	Legacy				53
		Business			53
		Banking Operations			53
		Credit Administration			54
		Competition			54
		Regulation and Supervision			55
		Employees			58
		Web Site Access to Legacy’s Filings With the FDIC			59
		Properties			59
		Legal Proceedings			59
FNB					60
THE MERGER					60
	Background of the Merger				60
	FNB’s Reasons for the Merger				63
	Our Board of Directors’ Reasons for the Merger; Recommendation				64
	Opinion of Our Financial Advisor				65
	Structure of the Merger and the Merger Consideration				74
	Election Procedure				75
	Allocation of FNB Common Stock and Cash				77
	Procedures for the Exchange of Shares of Our Common Stock				80
	Resale of FNB Common Stock				81
	Interests of Our Directors and Executive Officers in the Merger				82
	Board of Directors of FNB and FNB Bank Following the Merger				83

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			Page
	Regulatory Approvals Required for the Merger			83
	Public Trading Markets			85
	FNB Dividends			85
	Appraisal Rights of Dissenting Shareholders			85
THE MERGER AGREEMENT				87
	Terms of the Merger			87
	Treatment of Legacy Stock Options; Warrants and Convertible Debentures			87
	Closing and Effective Time of the Merger			87
	Representations, Warranties, Covenants and Agreements			88
	Declaration and Payment of Dividends			92
	Agreement Not to Solicit Other Offers			92
	Expenses and Fees			93
	Conditions to Completion of the Merger			93
	Amendment, Waiver and Termination of the Merger Agreement			94
	Effect of Termination; Break-up Fee			95
	Employee Benefit Plans			96
ACCOUNTING TREATMENT				96
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER				96
	Tax Opinion and Merger			97
	Legacy Shareholders Who Receive Solely FNB Common Stock			97
	Legacy Shareholders Who Receive Cash and FNB Common Stock			97
	Legacy Shareholders Who Receive Solely Cash			99
	Fractional Shares			99
	Material Federal Income Tax Consequences to FNB and Legacy			99
	Tax Consequences If the Merger Does Not Qualify as a Reorganization Under Section 368(a) of the Internal Revenue Code			99
	Backup Withholding			99
DESCRIPTION OF FNB CAPITAL STOCK				100
	FNB Common Stock			100
	FNB Preferred Stock			101
COMPARISON OF SHAREHOLDER RIGHTS				101
COMPARATIVE MARKET PRICES AND DIVIDENDS				111
BENEFICIAL OWNERSHIP OF LEGACY STOCK				112
ADJOURNMENT PROPOSAL				114
LEGAL MATTERS				114
EXPERTS				114
OTHER MATTERS				115
WHERE YOU CAN FIND MORE INFORMATION				115
SHAREHOLDER PROPOSALS				116
INDEX TO LEGACY FINANCIAL STATEMENTS				F-1

Appendix A

—

Agreement and Plan of Merger dated as of December 21, 2005 among F.N.B. Corporation, First National Bank of Pennsylvania and The Legacy Bank

A-1

Appendix B

—

Opinion of Griffin Financial Group, LLC

B-1

Appendix C

—

Section 215a of the National Bank Act

C-1

EX-5.1

EX-8.1

EX-10.1

EX-10.2

EX-10.3

EX-15.1

EX-23.1

EX-23.2

EX-23.3

EX-99.1

EX-99.2

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Q.		What matters will be considered at our special meeting?
A.		At our special meeting, our shareholders will be asked to vote for a proposal to approve and adopt the merger agreement whereby we will merge with and into FNB Bank. We sometimes refer to this proposal as the “merger proposal” in this proxy statement/ prospectus. Our shareholders will also be asked to vote for a proposal to grant discretionary authority to adjourn our special meeting, if necessary, to solicit additional proxies if we have not received sufficient votes to approve the merger at the time of our special meeting. We sometimes refer to this proposal as the “adjournment proposal” in this proxy statement/ prospectus.
Q.		What will I receive upon consummation of the merger?
A.		Upon consummation of the merger, you will have the right to elect to receive the following, subject to possible proration, in exchange for each share of our common stock:
		• one share of FNB common stock; or
		• $18.40 in cash.
Q.		What is the recommendation of our board of directors?
A.		Our board of directors has unanimously determined that the merger is fair to you and in the best interests of our shareholders and us and unanimously recommends that you vote for the merger proposal and the adjournment proposal.
		In making this determination, our board of directors considered the opinion of Griffin Financial Group, LLC, or “Griffin,” our independent financial advisor, as to the fairness from a financial point of view of the FNB shares and cash you will receive pursuant to the merger agreement. Our board of directors also reviewed and evaluated the terms and conditions of the merger agreement and the merger with the assistance of our independent legal counsel.
Q.		What was the opinion of our financial advisor?
A.		Griffin presented an opinion to our board of directors to the effect that, as of December 21, 2005 and based upon the assumptions made by Griffin, the matters it considered and the limitations of its review as set forth in its opinion, the merger consideration provided for in the merger agreement is fair to Legacy from a financial point of view.
Q.		What do I need to do now?
A.		After you carefully read this proxy statement/ prospectus and decide how you want to vote on the merger proposal and the adjournment proposal, you should complete, date and sign your proxy card and mail it in the enclosed return envelope as soon as possible so that your shares may be represented at our special meeting, even if you plan to attend our special meeting and vote in person.
Q.		Why is my vote important?
A.		Pennsylvania law and our articles of incorporation require the affirmative vote of the holders of not less than two-thirds of our outstanding common stock in order to approve and adopt the merger proposal. Therefore, if you fail to vote or abstain from voting on the merger proposal, it will have the same effect as a vote against the merger proposal.
Q.		How do I vote in person?
A.		If you are a stockholder of record, attend our special meeting and wish to vote in person, we will give you a ballot when you arrive at our special meeting.
Q.		How do I vote my shares if they are held in street name?
A.		If you are not a holder of record but you are a “beneficial holder,” meaning that your shares are registered in a name other than your own, such as a street name, you must either direct the holder of record of your shares as to how you want your shares to be voted or obtain a proxy from the holder of record so that you may vote yourself.

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Q.		What if I fail to instruct my broker?
A.		Brokers may not vote shares of our common stock that they hold for the benefit of another person either for or against the approval of the merger proposal without specific instructions from the person who beneficially owns those shares. Therefore, if your shares are held by a broker and you do not give your broker instructions on how to vote your shares, this will have the same effect as voting against the approval of the merger proposal.
Q.		May I vote electronically over the internet or by telephone?
A.		If your shares are registered in the name of a bank or broker, you may be eligible to vote your shares electronically over the internet or by telephone. Many banks and brokerage firms participate in the ADP Investor Communications Services online program. This program provides eligible shareholders who receive a paper copy of this proxy statement/ prospectus the opportunity to vote via the internet or by telephone. If your bank or brokerage firm is participating in ADP’s program, your proxy card will provide the instructions. If your proxy card does not reference internet or telephone information, please complete and mail the proxy card in the enclosed self-addressed, postage paid envelope.
Q.		May I change my vote after I have mailed my signed proxy?
A.		Yes. You may revoke your proxy at any time before the vote is taken at our special meeting. If you have not voted through a bank, broker, nominee or other holder of record, you may revoke your proxy by:
		• submitting written notice of revocation to our corporate secretary prior to the voting of that proxy at our special meeting;
		• submitting a properly executed proxy with a later date; or
		• voting in person at our special meeting.
		However, simply attending our special meeting without voting will not revoke an earlier proxy.
		If your shares are held in the name of a bank, broker, nominee or other holder of record, you should follow the instructions of the bank, broker, nominee or other holder of record regarding the revocation of proxies.
		If you voted your shares by telephone or internet, you can revoke your prior telephone or internet vote by recording a different vote, or by signing and returning a proxy card dated as of a date that is later than your last telephone or internet vote.
Q.		When do you expect to complete the merger?
A.		We anticipate that we will obtain all necessary regulatory approvals to consummate the merger in the second quarter of 2006. However, we cannot assure you when or if the merger will occur. We must first obtain the approval of our shareholders at our special meeting and we and FNB must obtain the requisite regulatory approvals.
Q.		Should I send my stock certificates now?
A.		No. Holders of our common stock should not submit their Legacy stock certificates for exchange until they receive the transmittal instructions and an election form from the exchange agent.
Q.		What rights do I have to dissent from the merger?
A.		If you do not vote in favor of the merger proposal and you comply precisely with the applicable procedural requirements, the Bank Act entitles you to receive the appraised value of your shares. You must carefully and precisely follow the applicable procedures under the Bank Act in order to exercise your appraisal rights. A complete copy of the relevant section of the Bank Act regarding appraisal rights is included in this proxy statement/ prospectus as Appendix C. The fair value of your shares as determined in an appraisal rights proceeding may be more or less than the merger consideration you are entitled to receive from FNB under the merger agreement.
Q.		Who can help answer my questions?
A.		If you have additional questions about the merger or would like additional copies of this proxy statement/ prospectus, please call Melissa Tyrrell at (717) 441-3400, extension 107.

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	FNB may encounter integration difficulties or may fail to realize the anticipated benefits of the merger.

	If the merger is not completed, Legacy will have incurred substantial expenses without realizing the expected benefits of the merger.

	Because the market price of FNB common stock may fluctuate, you cannot be certain of the market value of the common stock that you will receive in the merger.

	Future results of the combined companies may materially differ from the pro forma financial information presented in this proxy statement/ prospectus.

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	The merger agreement limits our ability to pursue alternatives to the merger.

	FNB’s status as a holding company makes it dependent on dividends from its subsidiaries to meet its obligations.

	Interest rate volatility could significantly harm FNB’s business.

	FNB’s results of operations are significantly affected by the ability of its borrowers to repay their loans.

	•	credit risks of a particular borrower;
	•	changes in economic and industry conditions;
	•	the duration of the loan; and
	•	in the case of a collateralized loan, uncertainties as to the future value of the collateral.

	FNB’s financial condition and results of operations would be adversely affected if its allowance for loan losses were not sufficient to absorb actual losses.

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	•	a regular review of the quality, mix and size of the overall loan portfolio;
	•	historical loan loss experience;
	•	evaluation of non-performing loans;
	•	assessment of economic conditions and their effects on FNB’s existing portfolio; and
	•	the amount and quality of collateral, including guarantees, securing loans.

	FNB’s financial condition may be adversely affected if it is unable to attract sufficient deposits to fund its anticipated loan growth.

	FNB could experience significant difficulties and complications in connection with its growth and acquisition strategy.

	•	potential exposure to unknown or contingent liabilities of banks and non-bank entities FNB acquires;
	•	exposure to potential asset quality issues of acquired banks and non-bank entities;
	•	potential disruption to FNB’s business;
	•	potential diversion of the time and attention of FNB’s management; and
	•	the possible loss of key employees and customers of the banks and other businesses FNB acquires.

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	FNB could be adversely affected by changes in the law, especially changes in the regulation of the banking industry.

	•	the payment of dividends;
	•	mergers with or acquisitions of other institutions;
	•	investments;
	•	loans and interest rates;
	•	the provision of securities, insurance or trust services; and
	•	the types of non-deposit activities in which FNB’s financial institution subsidiaries may engage.

	FNB’s results of operations could be adversely affected due to significant competition.

	•	changes in regulation;
	•	changes in technology and product delivery systems; and
	•	the accelerated pace of consolidation among financial services providers.

	FNB’s continued pace of growth may require it to raise additional capital in the future, but that capital may not be available when it is needed.

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	Adverse economic conditions in FNB’s market area may adversely impact its results of operations and financial condition.

	Certain provisions of FNB’s articles of incorporation and bylaws and Florida law may discourage takeovers.

	•	classify its board of directors into three classes, so that shareholders elect only one-third of its board of directors each year;
	•	permit shareholders to remove directors only for cause;
	•	do not permit shareholders to take action except at an annual or special meeting of shareholders;
	•	require shareholders to give FNB advance notice to nominate candidates for election to its board of directors or to make shareholder proposals at a shareholders’ meeting;
	•	permit FNB’s board of directors to issue, without shareholder approval unless otherwise required by law, preferred stock with such terms as its board of directors may determine; and
	•	require the vote of the holders of at least 75% of FNB’s voting shares for shareholder amendments to its by-laws.

	Loss of members of FNB’s executive team could have a negative impact on its business.

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	•	the businesses of FNB and Legacy may not be integrated successfully or the integration may be more difficult, time-consuming or costly than currently anticipated;
	•	expected revenue synergies and cost savings from the merger may not be realized within the expected time frame or at all;
	•	revenues may be lower than expected following the merger;
	•	deposit attrition, operating costs, loss of customers and business disruption, including, without limitation, difficulties in maintaining relationships with our employees, customers or suppliers may be greater than anticipated following the merger;
	•	the regulatory approvals for the merger may not be obtained on acceptable terms, on the anticipated schedule or at all;
	•	the merger may not be approved by the requisite vote of our shareholders;
	•	competitive pressure among financial services companies is intense;
	•	general economic conditions may be less favorable than expected;
	•	political conditions and related actions by the United States military abroad may adversely affect economic conditions as a whole;
	•	changes in the interest rate environment may reduce interest margins and impact funding sources;
	•	changes in market rates and prices may adversely impact the value of financial products and assets;
	•	legislation or changes in the regulatory environment may adversely affect the businesses in which FNB and Legacy are engaged; and
	•	litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect either company or their businesses.

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	•	Proposal 1 — A proposal to approve and adopt the merger agreement among FNB, FNB Bank and us;
	•	Proposal 2 — A proposal to grant discretionary authority to adjourn our special meeting if necessary to permit further solicitation of proxies because we have not received sufficient votes at the time of our special meeting to approve the merger proposal; and
	•	Such other business as may properly come before our special meeting and any adjournment, postponement or continuation of our special meeting.

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	•	submitting written notice of revocation to our corporate secretary prior to the voting of that proxy at our special meeting;
	•	submitting a properly executed proxy with a later date; or
	•	voting in person at our special meeting.

	The Legacy Bank
	2600 Commerce Drive
	Harrisburg, Pennsylvania 17110
	Attention: Kirsten C. Penwell, Secretary

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	Principal and Executive Offices — Located at 2600 Commerce Drive, Harrisburg, Pennsylvania 17110. Legacy owns this property in fee and without liens.
	Camp Hill Office — Located at 4231 Trindle Road, Camp Hill, Pennsylvania 17011. Legacy leases this property. The lease, effective October 26, 2001, is for a term of 10 years and 6 months with 3 five-year renewal options. Legacy is leasing the property at an annual rate of $43,200.
	Hazleton Office — One South Church Street, Hazleton, Pennsylvania 18201. Legacy leases this property. The lease, effective February 1, 2001, is for a 10-year term with 2 five-year renewal options. Legacy is leasing the property at an annual rate of $37,564.
	Drums Office — Rittenhouse Place, Route 309, Drums, Pennsylvania 18222. Legacy leases this property by assignment from Leesport Bank. The lease, effective May 26, 1992, is for a 20-year term with 2 five-year renewal options. Legacy is leasing the property at an annual rate of $6,985.
	McAdoo Office — 25 North Kennedy Drive, McAdoo, Pennsylvania 18237. Legacy owns this property in fee and without liens.
	Shenandoah Office — 101 North Main Street, Shenandoah, Pennsylvania 17976-1798. Legacy owns this property in fee and without liens.
	Williamsport Office — 120 West Fourth Street, Williamsport, Pennsylvania 17701. Legacy leases this property and adjoining parking spaces. The lease, effective December 22, 2003, is for a 10-year term with 2 five-year renewal options. Legacy is leasing the property and the adjoining parking spaces at an annual rate of $111,000.
	Pottsville Office — 394 South Centre Street, Pottsville, Pennsylvania 17901. Legacy leases this property. The lease, effective December 1, 2002, is for a two-year term with 1 one-year renewal option. Legacy is leasing the property at an annual rate of $41,131.

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	•	the materially higher dividend paid by FNB compared to the dividend paid by the other party;
	•	the fact that the FNB offer consisted of more stock than the other offer, which increased the ability of Legacy shareholders to participate in the future growth of FNB;
	•	the fact that FNB was an out-of-market buyer that likely would retain more Legacy employees than the other party, which was an in-market buyer;
	•	the fact that FNB intended to use Legacy as a platform for further expansion into central Pennsylvania and the possibility that this expansion could mean more jobs and a greater benefit to the communities served by Legacy;
	•	the fact that Legacy’s management was more likely to have a meaningful role in FNB’s eastward expansion than it would have had in any consolidation with an in-market buyer;
	•	the fact that FNB appeared to have a more diverse revenue stream than the other party and the related fact that a material component of the other party’s assets, and resulting revenue, were concentrated in an asset class that Legacy management perceived as carrying greater risk than the asset composition of FNB’s balance sheet;
	•	the fact that Legacy option holders would have the opportunity to convert their options into options to acquire FNB stock and thereby share in the future growth of FNB;

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	•	the fact that FNB agreed to operate Legacy as a separate division and to continue use of the Legacy name compared to the fact that the other party was not willing to do so; and
	•	the subjective belief of the members of our Strategic Options Committee that the trend toward bank consolidation in the United States would more likely include FNB than the other bidder at some time in the future, and the possibility of such a sequential transaction in the future would likely be beneficial to Legacy shareholders.

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	•	its understanding of FNB’s business, operations, financial condition, earnings and prospects and of Legacy’s business, operations, financial condition, earnings and prospects, including our geographic position in central and northeastern Pennsylvania;
	•	its understanding of the current and prospective environment in which FNB and Legacy operate, including regional and local economic conditions, the competitive environment for financial institutions generally and continuing consolidation in the financial services industry, and the likely effect of these factors on FNB in light of, and in absence of, the proposed merger;
	•	the merger with Legacy will expand FNB’s franchise to several markets in central and northeastern Pennsylvania that have recently experienced faster economic growth than FNB’s markets in western Pennsylvania and eastern Ohio;
	•	the review by the FNB board of directors with its legal advisors of the structure and terms of the merger, including the exchange ratio, the expectation of FNB’s legal advisors that the merger will qualify as a transaction of a type that is generally tax-free to stockholders for United States federal income tax purposes and, based on the exchange ratio and assuming continuation of FNB’s current per share dividend rate of $0.235 per quarter, an anticipated annual dividend increase of $0.94 for holders of Legacy common stock;
	•	the complementary nature of the respective customer bases, business products and skills of FNB and Legacy could result in opportunities to obtain synergies as products are cross-marketed and distributed over broader customer bases and best practices are compared and applied across businesses;
	•	the scale, scope, strength and diversity of operations, product lines and delivery systems that could be achieved by combining FNB and Legacy;
	•	the proposed board and management arrangements which would position the combined company with strong leadership and experienced operating management;
	•	the likelihood that the regulatory approvals needed to complete the transaction will be obtained; and
	•	the historical and current market prices of FNB common stock and Legacy common stock.

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	•	The terms of the merger agreement that called for 30% of our shares to be exchanged for $18.40 in cash and 70% of our shares to be exchanged on a share-for-share basis for FNB common stock. The board noted that the ten-day average price for FNB common stock was $18.25 which meant that Legacy shareholders would receive blended aggregate consideration of $18.30 per share. The board noted that this price reflected approximately a 43.5% premium for our shareholders over the $12.75 closing price of our common stock on December 14, 2005, the day immediately preceding the day that our board approved the merger;
	•	The fact that the FNB exchange ratio required that up to 30% of the merger consideration be composed of cash at $18.40 per share, thereby permitting those Legacy shareholders who wished to receive cash instead of FNB stock to elect an all-cash exchange or an exchange composed of part FNB common stock and part cash. The Legacy board understood that if more than 30% of the issued and outstanding Legacy common stock elected to receive cash, certain shareholders would be required to receive a portion of the merger consideration in FNB stock instead of cash;
	•	The opinion of Griffin that the merger consideration was fair to Legacy from a financial point of view;
	•	Management’s familiarity with and review of FNB’s business prospects and financial condition, including its future prospects;
	•	The adverse impact that the pressures of competition and our limited economies of scale would have on our ability to increase profitability;
	•	FNB’s agreement that George H. Groves would be appointed to the board of FNB Bank and that other non-employee members of our board of directors would be offered an appointment to a Harrisburg regional advisory board for a minimum of three years;
	•	The ability given in the merger agreement to the advisory board to enforce specifically certain of the non-financial covenants contained in the merger agreement;
	•	The fact that our employees who did not continue as FNB employees would be entitled to receive severance pay, depending upon years of service and position with us, and further that we would be permitted to pay retention bonuses to designated Legacy employees in connection with the merger in an aggregate amount not to exceed $200,000;
	•	A determination that a business combination with FNB would expand our lending capabilities and increase the range of financial products and services available to our customers;
	•	The prices, multiples of earnings per share and premiums over book value and market value paid in other recent acquisitions of financial institutions;
	•	The possible negative impact the merger with FNB would have on various constituencies served by Legacy, including potential job loss among certain senior Legacy employees;

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	•	The fact that the merger is expected to be tax-free with regard to Legacy shareholders who receive FNB common stock;
	•	Our alternatives of continuing as an independent community-focused bank or combining with other potential merger partners, compared to the effect of Legacy combining with FNB pursuant to the merger agreement, and the determination that the merger with FNB presented the best opportunity for maximizing shareholder value and achieving Legacy’s other strategic goals;
	•	The pro forma financial effects of the proposed transactions, including the potential cost savings resulting from back office efficiencies, consolidations and other cost savings, and enhanced revenue anticipated from the merger and the effects of the merger on the risk-based and leverage capital ratios of the combined company and its subsidiary bank;
	•	The fact that our shareholders who receive stock would have the ability to continue to participate in the growth of the combined company on a tax-deferred basis and also would benefit as a result of the significantly greater liquidity of the trading market for FNB common stock and that Legacy shareholders who desire immediate liquidity could elect to receive cash, noting that the receipt of cash would generally be taxable to such shareholders;
	•	The provisions pertaining to our ability in certain circumstances to withdraw our board’s recommendation of the merger to our shareholders and our ability to recommend another transaction to our shareholders and pursue such transaction in certain circumstances;
	•	The provisions permitting our board of directors to terminate the merger agreement if the value of FNB common stock declines by more than 20% from its price after the announcement of the merger agreement and underperforms by 20% or more compared to the Nasdaq Bank Index during the same time period; and
	•	The fact that the termination fee provision of the merger agreement could have the effect of discouraging superior proposals for a business combination between Legacy and a third party.

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	(i) reviewed certain publicly available financial statements and other information of Legacy and FNB, respectively, which Griffin believed to be relevant;
	(ii) discussed the past and current operations and financial condition and the prospects of each of Legacy and FNB with senior executives of Legacy and FNB, respectively, including with respect to FNB (x) the potential impact on FNB of the merger, including potential cost savings, synergies and other strategic, financial and operational benefits that management of FNB expects to realize from the combination of Legacy and FNB and (y) the impact of the proposed merger on the future financial performance of FNB;
	(iii) reviewed the publicly reported historical price and trading activity for Legacy common stock and FNB common stock, including a comparison of certain financial and stock market information for Legacy and FNB with similar publicly available information for certain other financial institutions the securities of which are publicly traded;
	(iv) reviewed earnings per share consensus estimates for FNB for the years ending December 31, 2005 and 2006;
	(v) reviewed the financial terms, to the extent publicly available, of certain merger and acquisition transactions between financial institutions that Griffin viewed as relevant;
	(vi) participated in discussions and negotiations between Legacy and FNB;
	(vii) reviewed a draft of the merger agreement;

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	(viii) considered the competitive environment for financial institutions; and
	(ix) performed comparable company, selected reference transaction, discounted dividend and pro forma merger analyses.

	Summary of Analyses by Griffin

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	•	Allegheny Valley Bancorp, Inc.
	•	CBT Financial Corporation
	•	Codorus Valley Bancorp, Inc.
	•	Columbia Financial Corporation
	•	Commercial National Financial Corporation
	•	Community Bank, National Association
	•	Dimeco, Incorporated
	•	DNB Financial Corporation
	•	East Penn Financial Corporation
	•	Emclaire Financial Corp.
	•	Honat Bancorp, Incorporated
	•	Iron & Glass Bancorp
	•	Juniata Valley Financial Corporation
	•	Kish Bancorp, Inc.
	•	Mauch Chunk Trust Financial Corp.
	•	Mid Penn Bancorp, Inc.
	•	MNB Corporation
	•	Northumberland Bancorp
	•	Norwood Financial Corp.
	•	Peoples Financial Services Corp.
	•	Somerset Trust Holding Company
	•	Tower Bancorp Incorporated

	•	Community Banks, Inc.
	•	First Commonwealth Financial Corporation
	•	Harleysville National Corporation
	•	Lakeland Bancorp, Incorporated
	•	National Penn Bancshares, Inc.
	•	Provident Bankshares Corporation
	•	S&T Bancorp, Inc.
	•	Sandy Spring Bancorp, Inc.
	•	Sterling Financial Corporation

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	•	Sun Bancorp, Inc.
	•	Susquehanna Bancshares, Inc.
	•	Yardville National Bancorp

						Peer				Peer
						Group				Group
		Legacy				Median				Mean
Asset Quality:
Tangible Equity & Trust Preferred/ Tangible Assets(%)			7.65				8.88				9.49
Borrowings/ Assets(%)			14.66				8.46				10.61
Loans/ Deposits(%)			98.27				81.52				79.33
Loan loss reserve/ Loans(%)			1.15				1.13				1.22
Non-performing assets/ Assets(%)			0.37				0.53				0.61
Loan loss reserve/ Non-performing assets(%)			232.4				126.2				232.1
Performance:
Return on average equity(%)			5.55				11.50				11.56
Return on average assets(%)			0.59				1.05				1.09
Net interest margin(%)			3.49				3.76				3.67
Yield on earning assets(%)			5.79				5.63				5.64
Cost of funds(%)			2.08				2.12				2.08
Noninterest income/ Operating revenue(%)			18.66				18.65				18.86
Noninterest income/ Average assets(%)			0.74				0.78				0.80
Noninterest expense/ Average assets(%)			3.09				2.54				2.69
Efficiency ratio(%)			76.18				63.62				63.05
Market Statistics:
Price/ Trailing 12-month earnings per share(x)			22.86				14.99				16.59
Price/ Book value per share(%)			123.67				179.24				181.52
Price/ Tangible book value per share(%)			157.62				179.79				186.12
Dividend yield(%)			—				2.58				2.55

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						Peer				Peer
						Group				Group
		FNB				Median				Mean
Asset Quality:
Tangible Equity & Trust Preferred/ Tangible Assets(%)			7.02				8.26				8.53
Borrowings/ Assets(%)			21.93				15.53				16.84
Loans/ Deposits(%)			95.73				91.43				90.32
Loan loss reserve/ Loans(%)			1.34				1.12				1.18
Non-performing assets/ Assets(%)			0.73				0.37				0.33
Loan loss reserve/ Non-performing assets(%)			232.40				207.8				282.7
Performance:
Return on average equity(%)			16.36				11.71				11.54
Return on average assets(%)			1.23				0.99				1.08
Net interest margin(%)			3.87				3.69				3.73
Yield on earning assets(%)			5.94				5.77				5.78
Cost of funds(%)			2.08				2.09				2.09
Noninterest income/ Operating revenue(%)			28.00				23.82				23.99
Noninterest income/ Average assets(%)			1.33				1.04				1.10
Noninterest expense/ Average assets(%)			2.82				2.62				2.79
Efficiency ratio(%)			57.11				59.00				60.06
Market Statistics:
Price/ Trailing 12-month earnings per share(x)			14.88				17.14				18.64
Price/ Projected EPS(1)(x)			15.51				16.52				17.10
Price/ Book value per share(%)			219.73				195.98				198.14
Price/ Tangible book value per share(%)			399.24				297.38				289.49
Dividend yield(%)			5.18				2.83				2.74

(1)	Based on estimated FNB core earnings.

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Acquiror		Acquired Company
Orrstown Financial Services		First National Bank of Newport
Tower Bancorp Inc.		FNB Financial Corp.
Standard Mutual Holding Company		Hoblitzell National Bank of Hyndman
F.N.B. Corporation		North East Bancshares Inc.
Sterling Financial Corp.		Pennsylvania State Banking Co
F.N.B. Corporation		Slippery Rock Financial Corp.
Leesport Financial Corp.		Madison Bancshares Group Ltd.
Community Bank System Inc.		First Heritage Bank
Harleysville National Corporation		Millennium Bank
Community Bank System Inc.		Grange National Banc Corp.
Univest Corporation of Pennsylvania		Suburban Community Bank
National Penn Bancshares Inc.		Home Towne Heritage Bank
KNBT Bancorp Inc.		First Colonial Group Inc.
Fulton Financial Corp.		Premier Bancorp Inc.
Univest Corporation of Pennsylvania		First County Bank

	•	The multiple of the selected transactions’ price per share to publicly-disclosed earnings per share for the latest 12 months at the time of announcement of the selected transaction;
	•	The multiple of the selected transaction’s price per share to book value per share and tangible book value per share using the acquired company’s most recent publicly-disclosed financial statements at the time of announcement of the selected transaction;
	•	The multiple of the selected transactions’ price to total assets using the acquired company’s most recent publicly disclosed financial statements at the time of announcement of the selected transaction;
	•	The implied tangible book premium to core deposits, which means total deposits less certificates of deposit greater than $100,000, using the acquired company’s most recent publicly-disclosed financial statements at the time of announcement of the selected transaction; and
	•	The market premium, which represents the selected transaction value per share less the acquired company’s stock price one trading day before announcement divided by the acquired company’s stock price one trading day before announcement.

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										Price/
		Price/								Tangible				Price/				Premium/				Market
		LTM EPS				Price/				Book				Assets				Core Dep.				Premium
		(x)				Book (%)				(%)				(%)				(%)				(%)
Pennsylvania transaction medians			23.06				246.93%				250.38%				23.53%				21.40%				39.87%
Mid-Atlantic transaction medians			24.07				246.93%				251.90%				23.53%				21.40%				39.87%
Nationwide transaction medians			21.67				224.32%				230.36%				20.23%				16.47%				35.59%
FNB/ Legacy			35.19				173.49%				214.73%				19.39%				18.86%				42.97%

		Legacy Terminal Value Price/Earnings Multiple
						15.0				16.0				17.0				18.0				19.0				20.0
			12.0	%		$	11.54			$	12.25			$	12.95			$	13.66			$	14.37			$	15.08
			13.0	%			11.05				11.73				12.40				13.08				13.76				14.43
Discount Rate			14.0	%			10.59				11.23				11.88				12.53				13.17				13.82
			15.0	%			10.14				10.76				11.38				12.00				12.62				13.24
			16.0	%			9.73				10.32				10.91				11.51				12.10				12.69

		FNB Terminal Value Price/Earnings Multiple
						15.0				16.0				17.0				18.0				19.0				20.0
			10.0	%		$	18.43			$	19.41			$	20.38			$	21.35			$	22.32			$	23.29
			11.0	%			17.69				18.62				19.54				20.47				21.40				22.33
Discount Rate			12.0	%			16.98				17.87				18.76				19.64				20.53				21.42
			13.0	%			16.31				17.16				18.01				18.86				19.70				20.55
			14.0	%			15.67				16.49				17.30				18.11				18.92				19.73

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	•	$18.40 in cash; or
	•	one share of FNB common stock.

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	•	all cash,
	•	all shares of FNB common stock, or
	•	a combination of cash and shares of FNB common stock.

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	•	an all stock election, you will receive 100 shares of FNB common stock;
	•	an all cash election, you will receive $1,840 in cash; or
	•	a combination election, you will receive:

	•	assuming an election of 75% cash and 25% stock, approximately $1,380 in cash and 25 shares of FNB common stock (and payment for any fractional share);
	•	assuming an election of 50% cash and 50% stock, approximately $920 in cash and 50 shares of FNB common stock (and payment for any fractional share); or
	•	assuming an election of 75% stock and 25% cash, approximately $460 in cash and 75 shares of FNB common stock (and payment for any fractional share).

	•	one share of FNB common stock for each share of our common stock you hold;
	•	$18.40 in cash for each share of our common stock you hold; or

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	•	one share of FNB common stock for each share of our common stock you hold for which you elect to receive FNB common stock and $18.40 in cash for each remaining share of our common stock you hold.

	•	if you made an all cash election, you will receive $18.40 in cash for each share of our common stock you hold;

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	•	if you made an all stock election, you will receive one share of FNB common stock for each share of our common stock you hold;
	•	if you made a combination election, you will receive one share of FNB common stock per share of our common stock you hold for which you elected to receive FNB common stock and $18.40 in cash for each remaining share of our common stock you hold; and
	•	if you hold undesignated shares, you will be deemed to have made an all cash election and will receive $18.40 in cash for each share of our common stock you hold, subject to the allocation provisions in the merger agreement.

	•	if you made an all cash election, you will receive $18.40 in cash for each share of our common stock you hold;
	•	if you hold undesignated shares, you will be deemed to have made an all cash election and you will receive $18.40 in cash for each share of our common stock you hold;
	•	if you made a combination election, you will receive the following consideration for the shares of our common stock you hold for which you elected to receive FNB common stock:

	•	a number of shares of FNB common stock equal to the following: (i) the sum of the number of shares of our common stock as to which you made a stock election and the number of shares of our common stock for which FNB common stock was elected in connection with combination elections by other Legacy shareholders multiplied by (ii) the stock proration factor; and
	•	cash in an amount equal to the following: (i) $18.40 multiplied by (ii) the sum of the number of shares of our common stock with respect to which all stock elections were made and the number of shares of our common stock for which FNB common stock was elected in connection with combination elections by other Legacy shareholders multiplied by (iii) one minus the stock proration factor; and

	•	if you made a combination election, you will receive $18.40 in cash for each of the remaining shares of our common stock you hold;
	•	if you made an all stock election, you will receive the following for each share of our common stock you hold:

	•	a number of shares of FNB common stock equal to the following: (i) the sum of the number of shares of our common stock with respect to which all stock elections were made and the number of shares of our common stock for which FNB common stock was elected in connection with combination elections by other Legacy shareholders multiplied by (ii) the stock proration factor; and
	•	cash in an amount equal to the following: (i) $18.40 multiplied by (ii) the sum of the number of shares of our common stock with respect to which all stock elections were made and the number of shares of our common stock for which FNB common stock was elected in connection with combination elections by other Legacy shareholders multiplied by (iii) one minus the stock proration factor.

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	•	if you made an all stock election, you will receive one share of FNB common stock for each share of our common stock you hold;
	•	if you made a combination election, you will receive one share of FNB common stock for each share of our common stock you hold for which you elected to receive FNB common stock;
	•	the exchange agent will then select by pro rata allocation according to the number of shares of our common stock held by the holders of the undesignated shares, other than shares for which appraisal rights have properly been perfected under the Bank Act, a sufficient number of shares such that aggregate number of shares of FNB common stock that would be issued in the merger equals 2,468,845, as closely as possible, subject to adjustment pursuant to the merger agreement;
	•	if the sum of the undesignated shares plus the shares of our common stock as to which all stock elections were made plus the number of shares of our common stock for which FNB common stock was elected in connection with combination elections by other Legacy shareholders is less than, and not approximately equal to, 2,468,845 shares of FNB common stock, then (i) each shareholder who made a combination election will receive the following consideration for each share of our common stock they hold for which they elected to receive cash and (ii) each shareholder who made an all cash election will receive the following consideration for each share of our common stock they hold:

	•	cash in an amount equal to the following: (i) $18.40 multiplied by (ii) the sum of the number of shares of our common stock with respect to which all cash elections were made and the number of shares of our common stock for which cash was elected in connection with combination elections by other Legacy shareholders multiplied by (iii) one minus the cash proration factor; and
	•	the number of shares of FNB common stock equal to the following: (i) the sum of the number of shares of our common stock with respect to which all cash elections were made and the number of shares of our common stock for which cash was elected in connection with combination elections by other Legacy shareholders multiplied by (ii) the cash proration factor.

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If 85% of Shares Elect Cash, Then:		If 85% of Shares Elect Stock, Then(1):
(a) A holder of 100 shares electing stock will receive all stock, and		(a) A holder of 100 shares electing cash will receive all cash, and
(b) A holder of 100 shares electing cash will receive stock and cash in the following amount:		(b) A holder of 100 shares electing stock would receive stock and cash in the following amounts:

Amount of Merger

Amount of Merger

Amount of Merger

Consideration in

Amount of Merger

Consideration in

Consideration in FNB Stock

Cash

Consideration in FNB Stock

Cash

64.71 shares

$

649.41

82.4 shares

$

324.71

(1)	Assumes FNB does not exercise its option to issue more than 2,468,845 shares of FNB common stock in the merger.

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	•	the continued indemnification of our current directors and executive officers under the merger agreement and providing these individuals with directors’ and officers’ insurance;
	•	the execution of employment agreements between FNB Bank and each of George H. Groves, Thomas W. Lennox and Joseph L. Paese that will become effective upon the consummation of the merger;
	•	the receipt of change of control payments pursuant to employment or change of control agreements with Legacy;
	•	the members of our board of directors will be offered the opportunity to serve as members of the advisory board of directors of FNB’s Harrisburg region and will receive certain fees for such services; and
	•	one member of our board of directors, George H. Groves, will be appointed as a member of FNB Bank’s board of directors.

	•	the employment agreements have an initial term of two years and thereafter automatically review for successive terms of one year, unless either party exercises its right to terminate the automatic renewal;
	•	the employment agreements provide for a minimum annual base salary of $196,000 in the case of Mr. Groves, $165,000 in the case of Mr. Lennox and $140,000 in the case of Mr. Paese, plus merit increases and incentive bonuses at the discretion of FNB; and
	•	Each of Messrs. Groves, Lennox and Paese is entitled to receive severance compensation of two times his then annual base salary in the event FNB terminates such officer’s employment for other than cause (as defined in the employment agreement).

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	•	that will result in a monopoly or be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the United States;

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	•	if its effect in any section of the country may be substantially to lessen competition or tend to create a monopoly; or
	•	if it would in any other manner be a restraint of trade,

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	•	our shareholders approve and adopt the merger agreement;
	•	we obtain all required governmental and regulatory consents and approvals; and
	•	all other conditions to the merger discussed in this proxy statement/ prospectus and the merger agreement are either satisfied or waived.

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	•	corporate matters, including due organization, qualification and authority;
	•	capitalization;
	•	subsidiaries;
	•	corporate power and authority to conduct its business;
	•	authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;
	•	required governmental filings and consents for approval of the merger and the absence of any defaults;
	•	the timely filing of reports with governmental entities, and the absence of investigations by regulatory agencies;
	•	financial statements and the absence of undisclosed liabilities;
	•	broker’s fees payable in connection with the merger;
	•	the absence of material adverse effects;
	•	legal proceedings;
	•	tax matters;
	•	material contracts and the absence of defaults thereunder;
	•	employee benefit plans;
	•	fiduciary accounts;
	•	real property;
	•	intellectual property;
	•	loans and nonperforming and classified assets;
	•	labor matters;
	•	FDIC reports;

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	•	compliance with applicable laws;
	•	insurance;
	•	the absence of agreements with regulatory agencies;
	•	allowances for loan losses;
	•	interest rate risk management instruments;
	•	books and records;
	•	environmental liabilities;
	•	the inapplicability of state anti-takeover laws;
	•	the absence of knowledge preventing the merger from qualifying as a reorganization;
	•	the receipt of a fairness opinion from our financial advisor; and
	•	the accuracy of information supplied for inclusion in this proxy statement/ prospectus and other similar documents.

	•	corporate matters, including due organization, qualification and authority;
	•	capitalization;
	•	subsidiaries;
	•	corporate power and authority to conduct its business;
	•	authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;
	•	required governmental filings and consents for approval of the merger and the absence of any defaults;
	•	the timely filing of reports with governmental entities, and the absence of investigations by regulatory agencies;
	•	financial statements and the absence of undisclosed liabilities;
	•	broker’s fees payable in connection with the merger;
	•	the absence of material adverse effects;
	•	legal proceedings;
	•	tax matters;
	•	material contracts and the absence of defaults thereunder;
	•	SEC reports;
	•	compliance with applicable laws;
	•	the absence of agreements with regulatory agencies;
	•	interest rate risk management instruments; and
	•	the absence of knowledge preventing the merger from qualifying as a reorganization.

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	•	conduct our business in the ordinary course in all material respects;
	•	use commercially reasonable best efforts to maintain and preserve intact our business organization, employees and advantageous business relationships; and
	•	take no action that would adversely affect or materially delay our ability to obtain any necessary regulatory approvals of the merger, perform our covenants and agreements in the merger agreement or complete the merger.

	•	issue, sell or otherwise permit to become outstanding any shares of our common stock or options or other rights to acquire our common stock, except for currently outstanding stock options;
	•	make, declare or pay any dividends or other distributions on any shares of our capital stock;
	•	adjust, split, combine, reclassify, redeem, purchase or acquire any shares of our common stock;
	•	except as contemplated by the merger agreement, grant any salary increase other than:

	•	normal increases in the ordinary course of business that, in the aggregate, do not exceed 3.5%, or, in any individual case, 5.0%;
	•	changes required by applicable law;
	•	changes pursuant to existing plans or commitments as disclosed to FNB;
	•	retention bonuses not in excess of $200,000 in the aggregate to such persons and in such amounts as we and FNB mutually agree;
	•	severance payments as disclosed to FNB; and
	•	grants of awards to newly-hired employees consistent with past practice.

	•	hire or promote any employee, except to satisfy existing contractual obligations or to fill vacancies where employment is terminable at our will and where the total compensation does not exceed $40,000 annually;
	•	enter into, establish, amend or make any contributions to any employee benefit plan, except as is required by applicable law or to satisfy existing contractual obligations or take any action to accelerate the vesting or exercisability of stock options or other benefits;
	•	other than in the ordinary course of business, sell, transfer, mortgage, encumber or otherwise dispose of any assets, deposits, business or properties;
	•	acquire, other than by foreclosure or in satisfaction of debts in the ordinary course of business, any assets, business, deposits or properties of any other entity;
	•	make any capital expenditure other than in the ordinary course of business and in amounts not exceeding $15,000 individually or $50,000 in the aggregate;
	•	amend our articles of incorporation or by-laws or those of our subsidiaries except as required by law;
	•	implement or adopt any change in our tax accounting or financial accounting principles, practices or methods, except as required by changes in law or regulations or generally accepted accounting principles;
	•	other than in the ordinary course of business and as permitted by the merger agreement, enter into or terminate any material contract or amend any material contract in any material respect;

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	•	enter into any settlement of any action, proceeding, order or investigation to which we are a party that involves the payment of more than $50,000 by us or that would impose any material restriction on our business;
	•	enter into any new material line of business or change our lending, investment, underwriting, risk and asset liability management or other banking and operating policies that are material to us, except as required by applicable law, or open or close any branch location;
	•	enter into any derivatives contract;
	•	other than in the ordinary course of business, incur any indebtedness or assume, guarantee, endorse or otherwise become responsible for the indebtedness of any other person or prepay any indebtedness;
	•	other than in the ordinary course of business, acquire any debt security or equity security other than federal funds or United States Government or agency securities with a term of one year or less or restructure or materially change our investment securities portfolio or gap position;
	•	other than in the ordinary course of business, make, renew or otherwise modify any loan, loan commitment or other extension of credit to any person, provided that we may make, renew or otherwise modify (i) an unsecured loan to any person, if, after making, renewing or otherwise modifying such loan, such person would not be indebted to us for an aggregate amount in excess of $250,000, (ii) make, renew or otherwise modify a secured loan to any person (other than a permanent loan secured by an owner-occupied 1-4 family single-family residence) if after making such loan, such person would not be indebted to us for an aggregate amount in excess of $2,000,000, (iii) make, renew or otherwise modify any permanent loan secured by an owner-occupied 1-4 single-family residence with a principal balance in excess of $500,000 or (iv) make, renew or otherwise modify any loan that contains terms that involve an exception to our credit policy manual;
	•	other than in the ordinary course of business, make any investment or commitment to invest in real estate or a real estate development project other than in foreclosures, acquisitions in a fiduciary capacity or in satisfaction of a debt previously contracted;
	•	take any action that would, or is reasonably likely to, prevent the merger from qualifying as a reorganization;
	•	fail to hold our special meeting;
	•	take any action that is intended, or is reasonably likely, to result in:

	•	any representations or warranties under the merger agreement becoming untrue in any material respect;
	•	any of the conditions to the merger not being satisfied; or
	•	a material violation of the merger agreement or the trust company merger agreement.

	•	take any action that would adversely affect or materially delay necessary governmental or regulatory approvals, or our ability to perform our covenants and agreements under the merger agreement or to consummate the transactions contemplated by the merger agreement; or
	•	enter into any contract or otherwise agree or commit to do any of the foregoing.

	•	take any action that would, or is reasonably likely to, prevent the merger from qualifying as a reorganization;
	•	take any action that is intended, or is reasonably likely to, result in:

	•	any representations or warranties under the merger agreement becoming untrue in any material respect;

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	•	any of the conditions to the merger not being satisfied; or
	•	a material violation of the merger agreement or the bank merger agreement.

	•	take any action that would adversely affect or materially delay necessary governmental or regulatory approvals, or its ability to perform its covenants and agreements under the merger agreement or to consummate the transactions contemplated by the merger agreement; or
	•	enter into any agreement or otherwise agree or commit to do any of the foregoing.

	•	initiate, solicit, encourage or take any action to facilitate any inquiries or proposals for any “Acquisition Proposal,” as defined below; or
	•	participate in any discussions or negotiations, furnish any information to or approve, recommend or enter into any agreement, regarding any “Acquisition Proposal.”

	•	we have first entered into a confidentiality agreement with the party proposing the Superior Proposal with confidentiality terms no less favorable to us than those contained in our confidentiality agreement with FNB; and
	•	our board of directors concludes in good faith, after consultation with our outside legal counsel, that failure to take these actions could reasonably be expected to cause our board of directors to violate its fiduciary duties to our shareholders.

	•	to notify FNB promptly, and in any event within 24 hours, after we receive any Acquisition Proposal, or any information related thereto, which notification shall describe the Acquisition Proposal and the third party making it; and
	•	to cease any existing discussions or negotiations with any persons with respect to any Acquisition Proposal.

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	•	direct or indirect acquisition of a substantial portion of the net revenues, net income or net assets of us or any of our subsidiaries;
	•	direct or indirect acquisition of 10% or more of our common stock after December 21, 2005 by a person who, on December 21, 2005 did not own 10% or more of our common stock;
	•	direct or indirect acquisition of 5% or more of our common stock after December 21, 2005 by a person who owned 10% or more of our common stock on December 21, 2005;
	•	tender offer or exchange offer that if consummated would result in any person beneficially owning 10% or more of our common stock; or
	•	merger, consolidation, business combination, recapitalization, liquidation or dissolution involving us, other than our proposed merger with FNB.

	•	is on terms that are more favorable from a financial point of view to our shareholders than the terms of the proposed merger with FNB;
	•	has financing, to the extent required, that is fully committed or reasonably determined to be available to the party making the offer; and
	•	is reasonably capable of being completed.

	•	the approval and adoption of the merger agreement and the approval of the merger by the holders of not less than two-thirds of our outstanding shares of common stock;
	•	the receipt and effectiveness of all governmental and other approvals, registrations and consents, and the expiration of all related waiting periods, required to complete the merger;
	•	the absence of any law, statute, regulation, judgment, decree, injunction or other order in effect by any court or other governmental entity that prohibits completion of the transactions contemplated by the merger agreement;
	•	the registration statement with respect to the FNB common stock to be issued in the merger shall have become effective under the Securities Act and no stop order or proceedings for that purpose will have been initiated or threatened by the SEC;

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	•	the approval of the listing of the FNB common stock to be issued in the merger on the New York Stock Exchange, subject to official notice of issuance;
	•	the truth and correctness of the representations and warranties of FNB and Legacy in the merger agreement, subject to the materiality standard provided in the merger agreement, and the performance by each of FNB and us in all material respects of our respective obligations under the merger agreement and the receipt by each of us of certificates from the other to that effect; and
	•	the receipt by each of FNB and Legacy of a legal opinion with respect to certain federal income tax consequences of the merger.

	•	if any of the required regulatory approvals for the merger are denied and the denial is final and nonappealable;
	•	if the merger has not been completed by September 30, 2006, unless the failure to complete the merger by that date is due to the terminating party’s actions;
	•	provided the terminating party is not then in material breach, if there is a breach by the other party that would cause the failure of the closing conditions described above, unless the breach is capable of being, and is, cured within 30 days of notice of the breach; or
	•	if our shareholders do not approve and adopt the merger agreement and approve the merger by the requisite vote, provided that we are not in material breach of our covenant to hold our special meeting and our board of directors is not in breach of its covenant to recommend such approval.

	•	if we have breached in any material respect our obligations with respect to Acquisition Proposals and Superior Proposals as described on pages      through                     ;
	•	if we have failed to have our board of directors recommend that our shareholders approve and adopt the merger agreement and approve the merger, or if our board of directors has withdrawn or modified its recommendation in a manner adverse to FNB;
	•	if our board of directors shall have recommended the approval of another proposal to acquire us; or
	•	if we have breached in any material respect our obligation to hold our special meeting.

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	•	if the average closing price of FNB common stock on the New York Stock Exchange as reported in The Wall Street Journal for the 20 consecutive trading days ending on and including the fifth trading day prior to the commencement of the aforesaid two-day period is less than the product of the closing price of FNB common stock on December 20, 2005 ($17.98) and 0.800; and
	•	if the number obtained by dividing such average closing price by the closing price of FNB common stock on December 20, 2005 ($17.98) is less than the number obtained by dividing the average closing price of the Nasdaq Bank Index for the 20 consecutive trading days ending on and including the second trading day prior to the date of commencement of the aforesaid two-day period by the price of the Nasdaq Bank Index on December 20, 2005 and subtracting 0.200 from such quotient;

	•	termination will not relieve a breaching party from liability for its willful breach giving rise to the termination; and
	•	the confidentiality agreement between the parties will survive termination.

	•	if FNB terminates the merger agreement prior to our special meeting because we have breached our obligations not to initiate, solicit or encourage any third parties to make an Acquisition Proposal or otherwise breach our obligations with respect to Acquisition Proposals or Superior Proposals in a manner adverse to FNB, our board of directors fails to make or withdraws its recommendation of the merger proposal or we fail to hold our special meeting;
	•	if we terminate the merger agreement and accept an Acquisition Proposal that is a Superior Proposal prior to the date of our special meeting and, after giving FNB an opportunity to adjust the terms of the merger agreement such that the Acquisition Proposal no longer remains a Superior Proposal, the Acquisition Proposal remains a Superior Proposal;
	•	the termination of the merger agreement following the commencement of a tender offer or exchange offer for 25% or more of our common stock and we have not sent to our shareholders, within 10 days after the commencement of such offer, a statement that our board of directors recommends the rejection of such tender offer or exchange offer; or
	•	if FNB or we terminate the agreement because:

	•	our shareholders did not approve the merger proposal and an Acquisition Proposal has been made by a third party after December 21, 2005 and prior to the termination of the agreement;
	•	such Acquisition Proposal has not been withdrawn prior to such termination; and

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	•	within 18 months following such termination we merge with or are acquired by that third party or that third party acquires more than 50% of our common stock or we otherwise become controlled by that third party within such time period.

	•	shareholders who received their shares of Legacy stock from the exercise of employee stock options or similar securities or otherwise as compensation;
	•	shareholders who hold their shares of Legacy stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;

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	•	shareholders, including, without limitation, financial institutions, insurance companies, tax-exempt organizations, dealers or traders in securities and shareholders subject to the alternative minimum tax, who may be subject to special rules;
	•	shareholders whose functional currency is not the United States dollar; or
	•	shareholders who, for United States federal income tax purposes, are non-resident alien individuals, foreign corporations, foreign partnerships, foreign estates or foreign trusts.

	FNB of an opinion from its outside counsel to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code; and
	Legacy of an opinion from its outside counsel to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code.
	The tax opinion of Duane Morris LLP, counsel for FNB is included as exhibit 8.1 to the registration statement filed with the SEC of which this proxy statement/ prospectus is a part. These opinions are based upon, among other things, representations of fact contained in certificates of officers of FNB and Legacy. We will not seek any ruling from the Internal Revenue Service as to the United States federal income tax consequences of the merger, and the opinions of counsel are not binding upon the Internal Revenue Service or any court. Accordingly, we can give no assurance that the Internal Revenue Service will not contest the conclusions expressed in the opinions or that a court will not sustain that contest.
	Assuming the merger is consummated in the manner described in this proxy statement/ prospectus and in accordance with the merger agreement, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The following discussion sets forth the United States federal income tax consequences to Legacy shareholders of the qualification of the merger as a “reorganization” within the meaning of Section 368(a) of the Code. As discussed below, the United States federal income tax consequences of the merger to a Legacy shareholder depend on the form of merger consideration received by the Legacy shareholder.

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Legacy		FNB
Pennsylvania law and our by-laws provide that our board of directors may remove a director from office if he(i) is adjudicated an incompetent by a court or is convicted of a felony; (ii) if within 60 days after notice of election, the director does not accept office either in writing or by attending a meeting of our board of directors or (iii) fails to attend regular meetings of our board of directors for six successive months without having been excused by our board of directors. Our entire board of directors or any individual director may be removed from office without assigning any cause by the vote of our shareholders entitled to cast at least a majority of the vote which all shareholders would be entitled to cast at an annual election of directors. A court may remove a director in a suit in which we are a party filed by a majority of the directors or by holders of at least 10% of our outstanding shares for fraudulent or dishonest acts or gross abuse of authority or discretion in our affairs. Vacancies on our board of directors, including vacancies resulting from an increase in the number of directors, may be filled by a majority vote of the remaining members of our board of directors, though less than a quorum, or by a sole remaining director, to serve until his successor is elected by the shareholders.		Under Florida law, unless the articles of incorporation of a corporation provide otherwise, directors may be removed by the corporation’s shareholders with or without cause; provided that, if a director is elected by a voting group, only the shareholders of that voting group may participate in the vote to remove him or her. Article 6 of FNB’s articles of incorporation, however, provides that, subject to the rights of holders of any preferred stock, any director or the entire board of directors may be removed without cause by the affirmative vote of the holders of at least 75% of the then outstanding shares of FNB common stock. Florida law and FNB’s by- laws provide that vacancies on the FNB board of directors, including vacancies resulting from an increase in the number of directors or resulting from removal from office, may be filled by a majority vote of the remaining directors, though less than a quorum.

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	Quorum of Shareholders

Legacy		FNB
Our by-laws provide that the holders of a majority of our shares entitled to vote on a matter to be acted upon, represented in person or by proxy, constitute a quorum for action on the matter. Our by-laws further provide that, if a meeting called for the election of directors is adjourned two times for lack of a quorum, the shareholders who attend the second of such adjourned meetings shall constitute a quorum for the purpose of electing directors.		FNB’s by-laws and Florida law provide that the holders of a majority of votes entitled to be cast on a matter to be considered, represented in person or by proxy, constitute a quorum of that voting group for action on the matter. FNB’s by-laws further provide that whenever the holders of any class or series of shares are entitled to vote separately on a specified item of business, the holders of a majority of the votes of that class or series entitled to be cast, represented in person or by proxy, shall constitute a quorum of such class or series.

	Adjournment of Shareholder Meetings

Legacy		FNB
Our by-laws provide that any regular or special meeting of shareholders that cannot be organized for lack of a quorum may be adjourned to such time and place as those shareholders present in person or by proxy may determine, without notice other than an announcement at the meeting until the requisite number of shareholders for a quorum are present in person or by proxy.		FNB’s by-laws and Florida law provide that, if a quorum is not present or represented at a shareholders meeting, the shareholders present and entitled to vote at the meeting may adjourn such meeting from time to time.

	Call of Special Meetings of Shareholders

Legacy		FNB
Our by-laws provide that special meetings of our shareholders may be called at any time by our Chairman of the Board, our board of directors or shareholders entitled to cast at least one-fifth of all of the shares entitled to vote at the meeting.		FNB’s by-laws provide that special meetings of shareholders may be called only by the chairman of the board, the president or the secretary of FNB pursuant to a resolution or written direction of at least 75% of the members of the FNB board or by the holders of not less than 10% of the outstanding shares of FNB.

	Shareholder Consent in Lieu of Meeting

Legacy		FNB
Pennsylvania law and our by-laws provide that any action that may be taken at a meeting of our shareholders may be taken without a meeting if a consent or consents in writing setting forth the action so taken is signed by all of our shareholders who would be entitled to vote at a meeting for such purpose and is filed with our secretary.		Florida law permits any action that may be taken at a meeting of the shareholders of FNB to be taken without a meeting, if, prior or subsequent to the action, one or more written consents signed by a majority the shareholders who would be entitled to vote at a meeting for such purpose are delivered to FNB.

	Dissenters’ Rights

Legacy		FNB
In a merger or consolidation in which the resulting institution is a national bank, such as FNB Bank, the Banking Code does not provide dissenters’ rights. Instead, dissenters’ rights are provided by Section 215a of the Bank Act.		Under Florida law, dissenters’ appraisal rights are available in connection with corporate actions involving certain mergers, share exchanges, sales or other dispositions of all or substantially all of the property of the corporation other than in the ordinary

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Legacy		FNB
Appraisal rights are otherwise provided under the Banking Code by incorporating by reference provisions of the BCL in situations where a merger or consolidation will result in an institution subject to the Banking Code: i.e., where the entity surviving a merger or resulting from a consolidation is a Pennsylvania bank or other institution that is subject to the Banking Code. In such cases, the rights and remedies of shareholders would then be governed under the provisions of the BCL applicable to dissenting shareholders and would be subject to the limitations on dissenters’ rights and remedies under the provisions of the BCL. Under the BCL, dissenters’ rights are generally afforded to shareholders in the event of corporate actions involving certain mergers, share exchanges, transfers of all or substantially all of the assets of the corporation, as well as certain other fundamental transactions in which the corporation is not the acquiring corporation. If a corporation’s shares are held by record of more than 2,000 shareholders or are listed on a national securities exchange, the BCL generally does not provide dissenters’ rights so long as the consideration received by shareholders pursuant to the plan consists solely of shares of the acquiring, surviving or new corporation and money in lieu of fractional shares.		course of business, the approval of certain control- share acquisitions and amendments of the articles of incorporation that would materially and adversely affect the rights or preferences of shares held by the dissenting shareholders. Under Florida law, appraisal rights generally are denied to holder of shares listed on a national securities exchange or the Nasdaq National Market and when the corporation’s shares are held of record by at least 2,000 persons and such outstanding shares have a market value of at least $10 million, not counting the value of certain insider shares.

	Dividends and Distributions

Legacy		FNB
Under the Banking Code, a Pennsylvania state-chartered bank may pay dividends only out of accumulated net earnings and may not declare or pay dividends unless surplus (shareholders’ equity) is at least equal to capital. Furthermore, dividends may not be declared or paid if the bank is in default in payment of any assessments due to the FDIC.		Subject to any restrictions in a corporation’s articles of incorporation, Florida law generally provides that a corporation may make distributions to its shareholders unless after giving effect thereto (i) the corporation would not be able to pay its debts as they become due in the usual course of business, or (ii) the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed upon the dissolution of the corporation to satisfy the preferential rights of shareholders having superior preferential rights to those shareholders receiving the distribution. FNB’s articles of incorporation do not contain any restrictions on the payment of dividends or the making of distributions to shareholders.

	Classes of Stock With Preferential Rights

Legacy		FNB
Our articles of incorporation authorize us to issue one or more classes or series of stock that may have rights preferential to our common stock. No such stock is currently outstanding. Our board of directors		The articles of incorporation of FNB authorize it to issue multiple classes of stock that may have rights preferential to the FNB common stock to be received by Legacy shareholders as a result of the merger. No

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Legacy		FNB
is authorized to determine the voting powers, if any, designations, preferential rights, including rights to preferential dividend rates, and related, participating, optional or other special rights, including the rights of holders of any such preferred stock in the event of liquidation, dissolution or winding up of the affairs of the bank, and conversion rights.		such stock is currently outstanding. Such preferential rights include rights to preferential dividend rates compared to such rates for FNB common stock, rights to prevent dividends being paid on the common stock until dividends have been paid on the preferred stock, rights to preferential payments upon any liquidation of FNB, independent class voting rights with respect to certain fundamental transactions and rights to convert shares of FNB preferred stock into FNB common stock at a conversion ratio that protects such preferred shareholders against a decline in the price of FNB common stock by further diluting the common stock.

	Director Qualifications, Number and Term

Legacy		FNB
Our by-laws provide that our board of directors must consist of no less than 5 nor more than 25 members divided into three classes, as equal in number as possible, with each director serving a staggered three-year term. In addition, our by-laws provide that each director must be a natural person of full age and a citizen of the Unites States of America and at least two-thirds of the members of our board of directors must be residents of Pennsylvania.		FNB’s by-laws provide that the board of directors of FNB shall consist of such number of directors as may be determined by the board of directors of FNB, which number shall be not less than 5 nor more than 25. FNB’s by-laws further provide that FNB’s board of directors shall be divided into three classes as equal in number as possible, with each director having a staggered, three-year term. Under Florida law and FNB’s by-laws, a director need not be a resident of Florida or a shareholder of FNB to qualify to serve as a director. FNB’s by-laws further provide that the directors must be at least 21 years of age.

	Nomination of Directors

Legacy		FNB
Our Nominating Committee Charter provides that our Nominating Committee will identify qualified individuals to become members of our board of directors and recommend to our board of directors nominees for election at each annual meeting of shareholders and any director nominees to be elected to fill any interim director vacancies and that the Nominating Committee will review and consider candidates submitted by shareholders.		FNB’s by-laws provide that directors may be nominated for election to FNB’s board of directors by either a resolution of the board of directors or by a shareholder of FNB. FNB’s by-laws provide that a shareholder may make nominations for director by providing FNB with written notice of the shareholder’s intention to nominate a director, which written notice generally must be received not less than 14 days prior to the meeting of shareholders called for the election of directors. The notice of a shareholder’s intention to nominate a director must include, among other things:
		• the name and address of the nominating shareholder;
		• a representation that the shareholder is a holder of record of FNB voting stock and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
		• information regarding each nominee as would have been required under the SEC’s proxy rules;
		• a description of all arrangements or understandings

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		among the shareholder and each nominee pursuant to which the nomination or nominations are to be made by the shareholder; and
		• the written consent of each nominee to serve as a director of FNB if so elected.

	Indemnification of Officers and Directors

Legacy		FNB
Our by-laws require that we indemnify our directors and officers against expenses, judgments, fines and amounts paid in settlement incurred by them in connection with any pending, threatened or completed action or proceeding by reason of the fact that director or officer is or was a director or officer of the bank, unless the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. Our by-laws further provide that we will pay expenses incurred in defending any action or proceeding in advance of its final disposition upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined that the director or officer is not entitled to be indemnified by us. Our by-laws state that the provisions for indemnification and advancement of expenses are non-exclusive with respect to any other rights, such as contractual rights or rights granted pursuant to a by-law or by vote of shareholders or disinterested directors, to which a person seeking indemnification or advancement of expenses may be entitled. It is our policy that indemnification of, and advancement of expenses to, our directors and officers will be made to the fullest extent permitted by law. Our by-laws permit us to purchase and maintain insurance on behalf of our directors and officers against any liability asserted against the director or officer and incurred in such capacity, whether or not we would have the power to indemnify a director or officer against such liability. Our by-laws also permit us to enter into separate indemnification agreements with any of our officers, directors, employees or agents.		Florida law permits a corporation to indemnify a director or officer who was or is a party to any threatened, pending or completed action, suit or other type of proceeding other than an action by or in the right of the corporation by reason of the fact that he is or was a director or officer or is now serving at the request of the corporation as a director or officer of another entity against expenses, including attorneys’ fees, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding. These indemnification rights apply if the director or officer acted in good faith and in a manner in which he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to a criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In addition, under Florida law, FNB may indemnify and hold harmless an officer or director who is a party in an action by or in the right of the corporation against expenses, including attorneys’ fees, and certain amounts paid in settlement, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof. Such indemnification shall be authorized if the director or officer has acted in good faith and in a manner in which he reasonably believed to be in or not opposed to the best interests of the corporation, except indemnification is not authorized where there is an adjudication of liability, unless a court determines, in view of all the circumstances, that such person is fairly and reasonably entitled to indemnity for such expenses. Florida law further provides that indemnification against the costs and expenses of defending any action is required to be made to any officer or director who is successful in defending an action of the type referred to in the immediately preceding paragraph. Except with regard to the costs and expenses of successfully defending an action as may be ordered by a court, indemnification as described in the previous paragraph is only required to be made to a director or officer if a determination is made that indemnification is proper under the circumstances. Such determination shall be made in accordance

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Legacy		FNB
		with the provisions of Florida law. Florida law further provides that expenses incurred in defending any action or proceeding may be paid by the corporation in advance of the final disposition upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined that the director or officer is not entitled to be indemnified by the corporation. Under Florida law, the provisions for indemnification and advancement of expenses are not exclusive. Accordingly, a corporation may make any other or further indemnification or advancement of expenses of any of its officers or directors, both as to action in his official capacity and as to action in another capacity while holding such office. Under Florida law, indemnification or advancement of expenses, however, shall generally not be made to or on behalf of any officer or director if a judgment or other final adjudication establishes that his actions or omissions were material to the cause of action so adjudicated and constitute:
		• a violation of the criminal law;
		• a transaction from which the officer or director derived an improper personal benefit;
		• an unlawful distribution; or
		• willful misconduct or a conscious disregard for the best interests of the corporation.
		Florida law and FNB’s articles of incorporation permit FNB to purchase and maintain insurance on behalf of any director or officer of FNB against any liability asserted against the director or officer and incurred in such capacity, whether or not FNB would have the power to indemnify the director or officer against such liability. FNB’s articles of incorporation further provide that its directors, officers and any other person designated by the board of directors of FNB is entitled to be indemnified to the fullest extent permitted by law.

	Director Liability

Legacy		FNB
Our by-laws include a provision limiting the personal liability of a director for monetary damages for any action taken, or failure to take any action, other than as would constitute criminal conduct or with respect to liability for nonpayment of taxes, and except to the extent that the director has breached or failed to perform his duties to us and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.		Under Florida law, a director is not liable for monetary damages for any statement, vote, decision or failure to act regarding corporate management or policy, unless the director breached or failed to perform his duties as a director and the director’s breach of, or failure to perform, those duties constitutes a violation of criminal law, self-dealing, an unlawful distribution, willful misconduct or recklessness. FNB’s by-laws contain a provision

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Legacy		FNB
		limiting the liability of its directors to the fullest extent permitted by law.

	Amendment of articles of incorporation and by-laws

Legacy		FNB
Under Pennsylvania law, our articles of incorporation may be amended only if the amendment is first proposed by our board of directors by the adoption of a resolution and approved by our shareholders. Our articles of incorporation provide that amendments related to the voting rights, qualifications, privileges and limitations of the common stock, merger provisions and our board of director’s ability to oppose a tender offer must be approved by an affirmative vote of the holders of at least 75% of our outstanding shares or 662/3% of our outstanding shares provided that such transaction has received the prior approval of at least 75% of all members of our board of directors. Our by-laws provide that they may be amended by the affirmative vote of a majority of the votes cast by our shareholders at a regular or special meeting; except that changes to our by-laws to amend the provisions that provide for director and officer indemnification require the affirmative vote of shareholders entitled to cast at least 75% of all votes entitled to be cast by shareholders. Our by-laws may also be amended by the affirmative vote of a majority of the members of our board of directors, subject to the power of the shareholders to change such action, except that changes to our by-laws to amend the provisions that limit director liability require the approval of our shareholders and changes to amend the provisions that provide for director and officer indemnification must be approved by two-thirds of the members of the entire board of directors or by the affirmative vote of the holders of at least 75% of our outstanding shares.		In order to amend the articles of incorporation of a Florida corporation, Florida law generally requires that, unless the articles of incorporation provide for a greater vote, the votes cast in favor of such an amendment must exceed the votes cast against such an amendment at a meeting at which a quorum is present; provided, however, that a majority of the outstanding votes entitled to be cast on the amendment is required with respect to amendments that would create dissenters’ rights under Florida law. Further, under Florida law, shareholder approval is not required for certain non-material amendments. Under Florida law, a corporation’s by-laws may be amended or repealed by the board of directors or shareholders; provided, however, that the board may not amend or repeal the corporation’s by-laws if the articles of incorporation reserve such power to the shareholders, or the shareholders, in amending or repealing the by-laws, expressly provide that the board of directors may not amend or repeal the by- laws or a particular bylaw provision. FNB’s by-laws provide that they may be altered or amended and new by-laws adopted by the affirmative vote of at least 75% of the members of FNB’s board of directors or by the affirmative vote of the holders of at least 75% of the outstanding shares entitled to vote thereon.

	Vote Required for Extraordinary Corporation Transactions

Legacy		FNB
Under Pennsylvania law, a merger or consolidation that will result in an entity subject to the Banking Code must be approved by a majority of the directors and at least two-thirds of the votes of all shareholders are entitled to be cast thereon. Under our articles of incorporation, a merger, consolidation, liquidation or dissolution or sale or other disposition of substantially all of our assets must be approved by the affirmative vote of at least 75% of the outstanding shares of our common stock or 662/3% of the outstanding shares provided that such transaction has received the prior approval of at least 75% of all members of our board		Under Florida law, generally, a merger, consolidation, share exchange, dissolution or sale of substantially all of a corporation’s assets other than in the ordinary course of business must be approved by the affirmative vote of the holders of a majority of the shares entitled to vote thereon unless the corporation’s articles of incorporation require a higher vote. Florida law further provides that, unless required by its articles of incorporation, the shareholders approval of a plan of merger if is not required if:

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Legacy		FNB
of directors.		• the articles of incorporation of the surviving corporation will not differ (except for certain minor amendments approved by the board of directors as provided by Florida law) from its articles before the merger; and
		• each shareholder of the surviving corporation whose shares were outstanding immediately prior to the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations and relative rights, immediately after the merger.
		FNB’s articles of incorporation require an affirmative vote of the holders of at least 75% of the outstanding shares of FNB common stock entitled to vote to approve a merger, consolidation or sale, lease, exchange or other disposition, in a single transaction or series of related transactions, of all or substantially all or a substantial part of the properties or assets of FNB, unless the board of directors of FNB has approved and recommended the transaction prior to the consummation thereof.

	Interested Shareholder Transactions

Legacy		FNB
The Banking Code requires that certain transactions, such as a merger, consolidation or dissolution, between us and any shareholder or entity controlled by a shareholder in which the shareholder would be treated differently from other shareholders (an “interested shareholder”) require, in addition to the other approval requirements under the Banking Code and our articles of incorporation and by-laws, the affirmative vote of the shareholders entitled to cast at least a majority of the votes that all shareholders would be entitled to cast with respect to the transaction, without counting the vote of the interested shareholder, unless the transaction is approved by a majority vote of the board of directors without counting the vote of directors who were nominated by, or have a material interest in, the interested shareholder.		Florida law contains a number of provisions that require supermajority approval for certain affiliate transactions. Under Florida law, if any person who together with his or her affiliates and associates beneficially owns 10% or more of any voting stock of the corporation (an “interested person”) is a party to any merger, consolidation, disposition of all or a substantial part of the assets of the corporation or a subsidiary of the corporation, or exchange of securities requiring shareholder approval (a “Business Combination”), such transaction shall be approved by the affirmative vote of the holders of two-thirds of the voting shares other than the shares beneficially owned by the interested person; provided, that such approval is not required if (1) the interested person transaction has been approved by a majority of the disinterested directors; (2) the corporation has not had more than 300 shareholders of record at any time during the three years preceding the date of the transaction’s announcement; (3) the interested person has been the beneficial owner of at least 80% of the corporation’s outstanding voting shares for at least five years preceding the date of the transaction’s announcement; (4) the interested person is the beneficial owner of at least 90% of the outstanding voting shares of the corporation, exclusive of shares acquired directly from the corporation in a transaction not approved by a majority of the disinterested directors; (5) the corporation is an

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Legacy		FNB
		investment company registered under the Investment Company Act of 1940 or (6) the consideration to be received by holders of the stock of the corporation meets certain minimum levels determined by a formula under Section 607.0901(4)(f) of the Florida Business Corporations Act.

	Fiduciary Duty

Legacy		FNB
Pursuant to Pennsylvania law and our by-laws, a director must perform his duties as a director in good faith, in a manner he reasonably believes to be in the best interests of the bank and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances, and is entitled in performing his duties to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by:(1) one or more of our officers or employees whom the director reasonably believes to be reliable and competent in the matters presented;(2) legal counsel, public accountants or other persons as to matters that the director reasonably believes to be within the professional or expert competence of such person or(3) a committee of the board upon which he does not serve, as to matters within its designated authority, which committee the director reasonably believes to merit confidence. Under Pennsylvania law and our articles of incorporation and by-laws, a director may, in considering our best interests, consider(1) the effects of any action on our shareholders, employees, suppliers, customers and creditors, and upon communities in which our offices or other establishments are located,(2) our short-term and long-term interests of the bank, including the possibility that the best interests of the bank may be served by the continued independence of the bank,(3) the resources, intent and conduct of any person seeking to acquire control of the bank and(4) all other pertinent factors.		FNB’s articles of incorporation provide that the board of directors of FNB, in evaluating a proposal for an extraordinary corporate transaction, shall consider all relevant factors, including, without limitation, the long-term prospects and interests of the corporation and its shareholders, the social, economic, legal or other effects of any action on the employees, suppliers and customers of the corporation and its subsidiaries, the communities and societies in which FNB and its subsidiaries operate, and the economy of the state and the nation. FNB’s articles of incorporation further provide that, if the board of directors of FNB determines that such a proposal should be rejected, it may take any lawful action to accomplish its purpose. Under Florida law, a director is required to discharge his duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner reasonably believed to be in the best interests of the corporation. In discharging his duties, a director is entitled to rely on: (1) information, opinions, reports, or statements, including financial statements and other financial data, if presented or prepared by officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; (2) legal counsel, public accountants or other persons as to matters the director reasonably believes are within the person’s professional or expert competence or (3) a committee of the Board of which the director is not a member if the director reasonably believes the committee merits confidence.

	Provisions with Possible Anti-Takeover Effects

Legacy		FNB
Our articles of incorporation provide that our board of directors may, if it deems advisable, oppose a tender offer or other offer for our capital stock and consider any one or more of the factors set forth in our articles of incorporation. Pennsylvania law and our articles of incorporation also provide that directors may, in discharging their fiduciary duties,		FNB is subject to statutory “anti-takeover” provisions under Florida law. Section 607.0902 of the Florida Business Corporations Act restricts the voting rights of certain shares of a corporation’s stock when those shares are acquired by a party who, by such acquisition, would control at least 20% of all voting rights of the corporation’s issued and

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Legacy		FNB
consider the interests of a number of different constituencies, including shareholders, employees, depositors, customers, creditors and the communities in which the corporation is located. Directors are not required to consider the interests of shareholders to a greater degree than other constituencies’ interests. We are subject to statutory “anti-takeover” provisions under the Banking Code. The Banking Code provides that if a person or group of persons acting in concert has voting power over shares of that would entitle the holders thereof to cast at least 30% of the votes that all shareholders would be entitled to cast in the election of directors, the controlling person is required to notify each of our shareholders that a control transaction has occurred and that all shareholders are entitled to demand that they be paid fair value for their shares by the controlling shareholder. In addition, there are various provisions in our articles of incorporation and by-laws that may serve as anti-takeover protections including: • the ability of the board of directors of Legacy to fill vacancies resulting from an increase in the number of directors; • the supermajority voting requirements for certain corporate transactions; and • provisions in Legacy’s articles of incorporation which authorize the board of directors of Legacy, without further shareholder action, to issue from time to time, up to 1,000,000 shares of Legacy preferred stock. The board of directors of Legacy is empowered to divide any and all of the shares of the Legacy preferred stock into series and to fix and determine the relative rights and preferences of the shares of any series so established. The “anti-takeover” provisions of Pennsylvania law and Legacy’s articles of incorporation and by-laws may have the effect of deterring merger proposals, tender offers or other attempts to effect changes in control of Legacy that are not negotiated with and approved by the board of directors of Legacy.		outstanding stock. The statute provides that the acquired shares (the “control shares”) will, upon such acquisition, cease to have any voting rights. The acquiring party may, however, petition the corporation to have voting rights re-assigned to the control shares by way of an “acquiring person’s statement” submitted to the corporation in compliance with the requirements of the statute. Upon receipt of such request, the corporation must submit, for shareholder approval, such request. Voting rights may be reassigned to the con trol shares by a resolution of a majority of the corporation’s shareholders for each class and series of stock, with the control shares not voting. Florida law further provides that a corporation may, by amendment to its articles of incorporation or by- laws, provide that, if the party acquiring the control shares does not submit an acquiring person’s statement in accordance with the statute, the corporation may redeem the control shares at any time during the period ending 60 days after the acquisition of control shares. If the acquiring party files an acquiring person’s statement, the control shares are not subject to redemption by the corporation unless the shareholders, acting on the acquiring party’s request for re-assignment, deny full voting rights to the control shares. Neither FNB’s articles of incorporation nor its by-laws have been amended to include such a provision. The statute does not alter the voting rights of any stock of the corporation acquired in certain specified transactions. In addition, there are various provisions in FNB’s articles of incorporation and by-laws that may serve as anti-takeover protections including: • the ability of the board of directors of FNB to fill vacancies resulting from an increase in the number of directors; • the supermajority voting requirements for certain corporate transactions; • the broad range of factors that the board of directors of FNB may consider in evaluating an unsolicited offer including a tender offer proposal; and • provisions in FNB’s articles of incorporation which authorize the board of directors of FNB, without further shareholder action, to issue from time to time, up to 20,000,000 shares of FNB preferred stock. The board of directors of FNB is empowered to divide any and all of the shares of the FNB

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Legacy		FNB
		preferred stock into series and to fix and determine the relative rights and preferences of the shares of any series so established.
		The “anti-takeover” provisions of Florida law and FNB’s articles of incorporation and by-laws may have the effect of deterring merger proposals, tender offers or other attempts to effect changes in control of FNB that are not negotiated with and approved by the board of directors of FNB. FNB is not aware of any effort or intent to gain control of FNB or any effort to organize a proxy contest or to accumulate shares of FNB.

	•	the high and low trading prices of shares of FNB common stock as reported on the New York Stock Exchange since January 1, 2004;
	•	the high and low trading prices of shares of our common stock as reported on the OTC Bulletin Board. These quotations reflect inter-dealer prices without retail markup, markdown or commission and may not necessarily represent actual transactions. In each case, this information is based on published sources; and
	•	quarterly cash dividends paid per share by FNB for the periods indicated.

		FNB Common Stock												Legacy Common Stock
		High				Low				Dividend				High				Low				Dividend
2004:
First quarter		$	22.79			$	18.79				0.23			$	15.45			$	12.75				—
Second quarter			22.63				18.80				0.23				16.90				15.00				—
Third quarter			22.91				19.40				0.23				15.05				14.00				—
Fourth quarter			22.82				19.88				0.23				15.25				14.05				—
2005:
First quarter			20.70				18.55				0.23			$	14.75			$	13.30				—
Second quarter			19.85				17.49				0.23				14.40				12.75				—
Third quarter			21.00				16.80				0.23				15.00				13.70				—
Fourth quarter			18.87				16.18				0.235				17.20				12.75				—
2006:
First quarter (through February 1)		$				$					0.235			$				$					—

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		Amount and
		Nature of
		Beneficial				Percent of
Name of Individual or Identity of Group		Ownership(1)(2)				Class(3)
5% or Greater Holders:
Northaven Management, Inc.			302,851				8.59	%
375 Park Avenue
New York, NY 10152
Directors:
Lawrence S. Allison(4)			9,936				*
Lawrence W. Bitner(5)			17,852				*
Martin F. Brophy(6)			3,992				*
Douglas Doherty(7)			75,399				2.00	%
George H. Groves(8)			170,397				4.52	%
William A. Hawkins(9)			15,411				*
William L. Jones III(10)			1,000				*
Ralph S. Klinepeter, Jr.(11)			13,203				*
Daniel A. Klingerman(12)			64,662				1.71	%
Thomas W. Lennox(13)			87,288				2.31	%
Robert J. Moisey(14)			17,849				*
Scott C. Penwell(15)			26,770				*
John H. Rhodes(16)			13,759				*
A. Richard Szeles(17)			26,552				*
Russell W. Twigg(18)			63,606				1.69	%
John B. Warden, III(19)			9,852				*
			617,528				16.38	%
Named Executive Officers:
Joseph DeBias(20)			24,687				*
Joseph L. Paese(21)			36,925				*
Paul F. Spiegel, Jr.(22)			19,592				*
Directors and Executive Officers as a group (22) persons			703,792				18.66	%

	*	Less than 1%

	(1)	The securities “beneficially owned” by an individual are determined in accordance with the definitions of “beneficial ownership” set forth in the General Rules and Regulations of the SEC and may include securities owned by or for the individual’s spouse and minor children and any other relative who has the same home, as well as securities to which the individual has or shares voting or investment power or has the right to acquire beneficial ownership within 60 days after December 31, 2005. Beneficial ownership may be disclaimed as to certain securities.
	(2)	Includes certain warrants granted to the organizers of the Bank and the directors in consideration of the risk undertaken by them during the organization of the Bank, and for their time, efforts and services in

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		organizing the Bank (referred to as “organizer warrants”). The organizer warrants are exercisable for ten years from the date of issuance, at a price of $10.00 per share. The organizer warrants were granted under the 1999 Equity Incentive Plan for Organizers.

	(3)	Includes options that are currently exercisable or exercisable within 60 days of December 31, 2005.
	(4)	Includes convertible subordinated debentures that can be converted into 2,000 shares of common stock by Mr. Allison.
	(5)	Includes 871 options granted to Mr. Bitner under the 1999 Directors’ Compensation Plan, 400 organizer warrants, 13,944 shares owned by Eastern Holding Co., Ltd., of which he is a director, and convertible subordinated debentures that can be converted into 400 shares of common stock.
	(6)	Includes 1,800 shares held by Mr. Brophy jointly with his spouse and convertible subordinated debentures that can be converted into 1,600 shares of common stock.
	(7)	Includes 70,719 shares held by Mr. Doherty jointly with spouse and convertible subordinated debentures that can be converted into 4,000 shares of common stock.
	(8)	Includes 50,000 shares jointly owned with his spouse, 74,598 options granted to Mr. Groves under the 1999 Equity Incentive Stock Option Plan, and 10,360 organizer warrants. Mr. Groves is also a Named Executive Officer.
	(9)	Includes 200 shares jointly owned with his spouse, 901 options granted to Mr. Hawkins under the 1999 Directors’ Compensation Plan, and 2,360 organizer warrants.

(10)	Includes 1,000 shares owned by Mr. Jones.
(11)	Includes 5,000 shares owned jointly with spouse, 889 options granted to Mr. Klinepeter under the 1999 Directors’ Compensation Plan, 1,360 organizer warrants, and convertible subordinated debentures that can be converted into 1,000 shares of common stock.
(12)	Includes 8,035 shares, which may be purchased under exercisable warrants, 27,140 shares held jointly with spouse, 675 shares held as custodian for Mr. Klingerman’s children, and convertible subordinated debentures that can be converted to 600 shares of common stock.
(13)	Includes 1,000 shares of common stock held individually by his spouse, 10,375 shares owned jointly with spouse, 41,079 options granted to Mr. Lennox under the 1999 Equity Incentive Stock Option Plan, 3,360 organizer warrants, and convertible subordinated debentures that can be converted into 3,000 shares of common stock. Mr. Lennox is also a Named Executive Officer.
(14)	Includes 9,470 shares jointly owned with his spouse, 2,050 shares held individually by his spouse, 506 options granted to Mr. Moisey under the 1999 Directors Compensation Plan, and convertible subordinated debentures that can be converted into 2,000 shares of common stock.
(15)	Includes 838 options granted to Mr. Penwell under the 1999 Directors’ Compensation Plan, 1,360 organizer warrants held individually by Mr. Penwell, 231 shares of common stock held individually by his spouse, 5,750 options held individually by his spouse, and 13,944 shares of common stock owned by Eastern Holding Co., Ltd., of which he is a director.
(16)	Includes 829 options granted to Mr. Rhodes under the 1999 Directors’ Compensation Plan, 1,360 organizer warrants and 5,000 shares owned by Brandywine Financial Resources, Inc., of which he is a director.
(17)	Includes 19,195 shares jointly owned with his spouse, 453 options granted to Mr. Szeles under the 1999 Directors Compensation Plan, and convertible subordinated debentures that can be converted into 4,000 shares of common stock.
(18)	Includes 8,035 shares, which may be purchased under exercisable warrants, 33,140 shares held jointly with Mr. Twigg’s spouse, and 21,500 shares held in custody for Mr. Twigg’s children.
(19)	Includes convertible subordinated debentures that can be converted into 2,000 shares of common stock by Mr. Warden.

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(20)	Includes 14,000 options granted to Mr. DeBias under the 1999 Equity Incentive Stock Option Plan and convertible subordinated debentures that can be converted into 2,000 shares of common stock. Mr. DeBias is a Named Executive Officer.
(21)	Includes 30,000 options granted to Mr. Paese under the 1999 Equity Incentive Stock Option Plan, 2,425 shares held in custody for Mr. Paese’s children, and convertible subordinated debentures that can be converted to 1,000 shares of common stock. Mr. Paese is a Named Executive Officer.
(22)	Includes 5,450 shares owned jointly with spouse, 12,500 options granted to Mr. Spiegel under the 1999 Equity Incentive Stock Option Plan, and convertible subordinated debentures that can be converted into 400 shares of common stock. Mr. Spiegel is a Named Executive Officer.

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	FNB’s Annual Report on Form 10-K for the year ended December 31, 2004;
	FNB’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005; and
	FNB’s Current Reports on Form 8-K filed April 12, 2005, April 25, 2005, August 22, 2005, October 6, 2005, December 21, 2005, January 23, 2006 and January 31, 2006; and
	FNB further incorporates by reference any additional documents that it files with the SEC, under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act between the date of this proxy statement/ prospectus and the date of the Legacy special meeting. These documents include periodic reports such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.

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		Page
Audited:
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements			F-2
Consolidated Balance Sheets at December 31, 2004 and 2003			F-3
Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002			F-4
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002			F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002			F-6
Notes to Consolidated Financial Statements			F-7
Unaudited:
Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004			F-29
Consolidated Statements of Income for the nine months ended September 30, 2005 and 2004			F-30
Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2004 and 2005			F-31
Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004			F-32
Notes to Consolidated Financial Statements			F-33

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Item 8.	Financial Statements and Supplementary Data.

	/s/ Beard Miller Company LLP

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					December 31,
					2004				2003
					(In thousands, except
					share amounts)
ASSETS
Cash and due from banks					$	5,305			$	8,709
Federal funds sold						1,868				—
Short-term investments						22				21
			Cash and Cash Equivalents			7,195				8,730
Securities available for sale						51,098				43,184
Securities held to maturity, fair value 2004 $11,930; 2003 $12,450						12,013				12,500
Loans receivable, net of allowance for loan losses 2004 $3,461; 2003 $3,430						249,019				226,155
Bank premises and equipment, net						4,502				3,578
Goodwill						5,566				6,264
Other intangible assets						1,375				1,548
Accrued interest receivable						1,437				1,242
Bank owned life insurance						4,540				—
Other assets						1,845				2,285
			Total Assets		$	338,590			$	305,486
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
	Deposits:
		Non-interest bearing			$	27,931			$	28,125
		Interest-bearing				216,533				211,955
			Total Deposits			244,464				240,080
	Short-term borrowings					23,425				10,187
	Long-term Federal Home Loan Bank borrowings					28,000				14,500
	Convertible subordinated debentures					4,500				4,785
	Other liabilities					1,476				2,062
			Total Liabilities			301,865				271,614
Shareholders’ Equity
	Preferred stock, $5 par value; authorized 1,000,000 shares; none issued and outstanding					—				—
	Common stock, $5 par value; authorized 5,000,000 shares; issued and outstanding 2004 3,609,417 shares; 2003 3,550,273 shares					18,047				17,751
	Surplus					19,327				18,930
	Accumulated deficit					(453	)			(2,808	)
	Accumulated other comprehensive loss					(196	)			(1	)
			Total Shareholders’ Equity			36,725				33,872
			Total Liabilities and Shareholders’ Equity		$	338,590			$	305,486

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				Years Ended December 31,
				2004				2003				2002
				(In thousands, except per
				share data)
Interest Income
	Loans receivable, including fees			$	14,410			$	12,048			$	6,730
	Securities, taxable				1,851				1,680				664
	Federal funds sold and short-term investments				8				47				141
		Total Interest Income			16,269				13,775				7,535
Interest Expense
	Deposits				4,369				4,182				3,339
	Short-term borrowings				125				126				—
	Convertible subordinated debentures				233				60				—
	Long-term debt				789				641				376
		Total Interest Expense			5,516				5,009				3,715
		Net Interest Income			10,753				8,766				3,820
Provision for Loan Losses					1,115				428				540
		Net Interest Income after Provision for Loan Losses			9,638				8,338				3,280
Noninterest Income
	Service charges on deposit accounts				569				458				158
	Asset management fees				815				624				401
	Service charges on loans				340				250				153
	Securities gains, net				—				183				27
	Gain on sales of loans				416				82				1
	Gain on sale of branches				196				—				—
	Other				47				5				5
		Total Noninterest Income			2,383				1,602				745
Noninterest Expenses
	Salaries and employee benefits				5,277				4,549				2,249
	Occupancy and equipment				1,243				1,138				486
	Data processing				1,055				872				361
	Advertising, marketing and business development				205				280				180
	Professional services				314				331				140
	Other				2,403				2,058				837
		Total Noninterest Expenses			10,497				9,228				4,253
		Income (Loss) before Income Tax Benefit			1,524				712				(228	)
Income Tax Benefit					831				317				485
		Net Income		$	2,355			$	1,029			$	257
Earnings per Share
	Basic			$	0.66			$	0.37			$	0.19
	Diluted			$	0.64			$	0.37			$	0.19

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																					Accumulated
																					Other
																					Comprehensive
					Issued				Common								Accumulated				Income
					Shares				Stock				Surplus				Deficit				(Loss)				Total
					(In thousands)
Balance — December 31, 2001						1,299			$	6,495			$	6,463			$	(4,094	)		$	18			$	8,882
	Comprehensive income:
		Net income				—				—				—				257				—				257
		Unrealized gain on securities available for sale, net of tax of $132				—				—				—				—				256				256
		Reclassification adjustment for realized gains, net of tax of $9				—				—				—				—				(18	)			(18	)
			Total Comprehensive Income																							495
	Sale of common stock					44				222				263				—				—				485
	Stock issued for directors’ compensation					3				13				15				—				—				28
Balance — December 31, 2002						1,346				6,730				6,741				(3,837	)			256				9,890
	Comprehensive income:
		Net income				—				—				—				1,029				—				1,029
		Unrealized loss on securities available for sale, net of tax of $(70)				—				—				—				—				(136	)			(136	)
		Reclassification adjustment for realized gains, net of tax of $62				—				—				—				—				(121	)			(121	)
			Total Comprehensive Income																							772
	Stock issued in connection with acquisition of Northern State Bank					1,197				5,983				6,832				—				—				12,815
	Sale of common stock					981				4,903				5,460				—				—				10,363
	Warrants converted					24				120				(120	)			—				—				—
	Stock issued for directors’ compensation					3				15				17				—				—				32
Balance — December 31, 2003						3,551				17,751				18,930				(2,808	)			(1	)			33,872
	Comprehensive income:
		Net income				—				—				—				2,355				—				2,355
		Unrealized loss on securities available for sale, net of tax of $(103)				—				—				—				—				(195	)			(195	)
			Total Comprehensive Income																							2,160
	Debentures converted					22				114				144				—				—				258
	Stock options exercised					32				159				202				—				—				361
	Stock issued for directors’ compensation					4				23				51				—				—				74
Balance — December 31, 2004						3,609			$	18,047			$	19,327			$	(453	)		$	(196	)		$	36,725

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					Years Ended December 31,
					2004				2003				2002
					(In thousands)
Cash Flows from Operating Activities
	Net income				$	2,355			$	1,029			$	257
	Adjustments to reconcile net income to net cash provided by operating activities:
			Provision for loan losses			1,115				428				540
			Provision for depreciation and amortization			726				525				237
			Amortization of intangible assets			173				58				—
			Net amortization of investment securities			715				763				103
			Deferred income taxes			(831	)			(317	)			(485	)
			Stock issued for directors’ compensation			74				32				28
			Securities gains			—				(183	)			(27	)
			Gains on sale of loans			(416	)			(82	)			(1	)
			Gain on sale of branches			(196	)			—				—
			Earnings on bank-owned life insurance			(40	)			—				—
			Decrease (increase) in accrued interest receivable and other assets			1,100				(918	)			(313	)
			Increase (decrease) in other liabilities			(486	)			(16	)			194
			Net Cash Provided by Operating Activities			4,289				1,319				533
Cash Flows from Investing Activities
	Securities available for sale:
		Purchases				(25,522	)			(48,029	)			(20,022	)
		Proceeds from sales				2,463				27,700				563
		Proceeds from maturities and principal repayments				14,054				17,542				2,838
	Securities held to maturity:
		Purchases				(2,000	)			(13,962	)			—
		Proceeds from maturities and principal repayments				2,271				1,319				—
	Net increase in loans receivable					(43,293	)			(29,045	)			(24,264	)
	Proceeds from sale of loans					6,626				—				—
	Purchase of loans					(15,511	)			—				—
	Increase in cash from Bank and branch sale/acquisitions					9,093				37,931				—
	Purchase of bank owned life insurance					(4,500	)			—				—
	Purchases of bank premises and equipment					(1,896	)			(995	)			(83	)
			Net Cash Used in Investing Activities			(58,215	)			(7,539	)			(40,968	)
Cash Flows from Financing Activities
	Net increase (decrease) in deposits					25,292				(20,482	)			32,701
	Net increase in short-term borrowings					13,238				7,190				—
	Proceeds from long-term borrowings					16,000				5,285				11,000
	Repayments of long-term borrowings					(2,500	)			(2,000	)			—
	Net proceeds from issuance of common stock					361				10,363				485
			Net Cash Provided by Financing Activities			52,391				356				44,186
			Net Increase (Decrease) in Cash and Cash Equivalents			(1,535	)			(5,864	)			3,751
Cash and Cash Equivalents — Beginning						8,730				14,594				10,843
Cash and Cash Equivalents — Ending					$	7,195			$	8,730			$	14,594
Supplementary Cash Flows Information
	Interest paid				$	5,451			$	4,861			$	3,774
	Income taxes paid				$	52			$	8			$	—
	Debentures converted into common stock				$	258			$	—			$	—

F-6

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Table of Contents

	Principles of Consolidation

	Organization and Nature of Operations

	Estimates

	Presentation of Cash Flows

	Securities

F-7

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Table of Contents

	Loans Receivable

	Allowance for Loan Losses

F-8

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Table of Contents

	Bank Premises and Equipment

	Goodwill and Other Intangible Assets

	Transfers of Financial Assets

	Trust Assets

F-9

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Table of Contents

	Advertising Costs

	Income Taxes

	Reclassifications

	Stock Compensation Plans

			2004				2003				2002
			(In thousands, except per share
			data)
Net income, as reported			$	2,355			$	1,029			$	257
Total stock-based compensation expense determined under fair value method, net of tax				(194	)			(99	)			(185	)
Pro forma net income			$	2,161			$	930			$	72
Earnings per share — basic:
	As reported		$	.66			$	.37			$	.19
	Pro forma		$	.60			$	.33			$	.05
Earnings per share — diluted:
	As reported		$	.64			$	.37			$	.19
	Pro forma		$	.59			$	.33			$	.05

F-10

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Table of Contents

		2004				2003				2002
Weighted-average grant date fair value		$	2.96			$	2.21			$	3.19
Expected life in years			7				7				7
Risk-free interest rate			3.77	%			3.36	%			4.85	%

	Earnings per Common Share

		Years Ended December 31,
		2004				2003				2002
		(In thousands)
Net income		$	2,355			$	1,029			$	257
Average number of common shares outstanding			3,582				2,785				1,337
Effect of dilutive options and warrants			103				17				5
Average number of common shares outstanding used to calculate diluted earnings per common share			3,685				2,802				1,342

	Off-Balance Sheet Financial Instruments

	New Accounting Standards

F-11

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Table of Contents

F-12

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Table of Contents

					December 31, 2004
									Gross				Gross
					Amortized				Unrealized				Unrealized				Fair
					Cost				Gains				Losses				Value
					(In thousands)
Securities Available for Sale
	Debt securities:
			U.S. Treasury securities		$	552			$	11			$	—			$	563
			U.S. Government agency obligations			17,524				18				(61	)			17,481
			Mortgage-backed securities			16,683				17				(127	)			16,573
			Collateralized mortgage obligations			12,557				9				(58	)			12,508
			Corporate and other debt securities			775				1				(109	)			667
		Total Debt Securities				48,091				56				(355	)			47,792
	Federal Home Loan Bank stock					2,878				—				—				2,878
	Other equity securities					428				—				—				428
					$	51,397			$	56			$	(355	)		$	51,098
Securities Held to Maturity
	U.S. Government agency obligations				$	3,035			$	1			$	(10	)		$	3,026
	Mortgage-backed securities					3,663				—				(53	)			3,610
	Collateralized mortgage obligations					5,315				13				(34	)			5,294
					$	12,013			$	14			$	(97	)		$	11,930

F-13

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Table of Contents

					December 31, 2003
									Gross				Gross
					Amortized				Unrealized				Unrealized				Fair
					Cost				Gains				Losses				Value
					(In thousands)
Securities Available for Sale
	Debt securities:
			U.S. Treasury securities		$	553			$	30			$	—			$	583
			U.S. Government agency obligations			11,336				110				(25	)			11,421
			Mortgage-backed securities			20,480				52				(151	)			20,381
			Collateralized mortgage obligations			8,418				39				(29	)			8,428
			Corporate and other debt securities			775				2				(29	)			748
		Total Debt Securities				41,562				233				(234	)			41,561
	Federal Home Loan Bank stock					1,538				—				—				1,538
	Other equity securities					85				—				—				85
					$	43,185			$	233			$	(234	)		$	43,184
Securities Held to Maturity
	U.S. Government agency obligations				$	1,052			$	2			$	—			$	1,054
	Mortgage-backed securities					4,484				—				(47	)			4,437
	Collateralized mortgage obligations					6,964				16				(21	)			6,959
					$	12,500			$	18			$	(68	)		$	12,450

F-14

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Table of Contents

				Less Than 12 Months								12 Months or More								Total
				Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
				Value				Losses				Value				Losses				Value				Losses
				(In thousands)
Securities Available for Sale:
	U.S. Government agency obligations			$	7,834			$	(61	)		$	—			$	—			$	7,834			$	(61	)
	Mortgage-backed securities				3,252				(11	)			10,109				(116	)			13,361				(127	)
	Collateralized mortgage obligations				3,801				(32	)			2,522				(26	)			6,323				(58	)
	Corporate and other debt securities				—				—				641				(109	)			641				(109	)
		Total Temporarily Impaired Securities Available for Sale		$	14,887			$	(104	)		$	13,272			$	(251	)		$	28,159			$	(355	)
Securities Held to Maturity:
	U.S. Government agency obligations			$	1,026			$	(10	)		$	—			$	—			$	1,026			$	(10	)
	Mortgage-backed securities				—				—				3,610				(53	)			3,610				(53	)
	Collateralized mortgage obligations				3,127				(16	)			1,015				(18	)			4,142				(34	)
		Total Temporarily Impaired Securities Held to Maturity		$	4,153			$	(26	)		$	4,625			$	(71	)		$	8,778			$	(97	)

			Available for Sale								Held to Maturity
			Amortized				Fair				Amortized				Fair
			Cost				Value				Cost				Value
			(In thousands)
Within one year			$	1,533			$	1,527			$	—			$	—
Over one year through five years				15,058				15,024				3,035				3,026
Over five years through ten years				1,510				1,519				—				—
Over ten years				750				641				—				—
Mortgage-backed securities and collateralized mortgage obligations				29,240				29,081				8,978				8,904
	Total		$	48,091			$	47,792			$	12,013			$	11,930

F-15

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Table of Contents

			2004				2003
			(In thousands)
Commercial real estate			$	108,063			$	104,914
Commercial				88,541				78,298
Residential real estate				26,174				17,261
Consumer				27,854				25,948
	Total Loans			250,632				226,421
Unamortized premium on purchased loans				1,581				3,019
Net deferred loan costs				267				145
Allowance for loan losses				(3,461	)			(3,430	)
	Net Loans		$	249,019			$	226,155

			Years Ended December 31,
			2004				2003				2002
			(In thousands)
Balance, beginning			$	3,430			$	1,300			$	982
	Provision for loan losses			1,115				428				540
	Added through acquisitions			—				2,014				—
	Reduced due to sale of loans			(310	)			—				—
	Charge-offs			(812	)			(347	)			(222	)
	Recoveries			38				35				—
Balance, ending			$	3,461			$	3,430			$	1,300

		December 31,
		2004				2003
		(In thousands)
Impaired loans, (all have a valuation allowance)		$	4,213			$	4,814
Valuation allowance related to impaired loans		$	1,334			$	988
Total non-accrual loans		$	1,037			$	1,161
Total loans past due ninety days or more and still accruing		$	42			$	195

F-16

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Table of Contents

		Years Ended December 31,
		2004				2003				2002
		(In thousands)
Average investment in impaired loans		$	4,686			$	4,582			$	1,437
Interest income recognized on impaired loans, total		$	338			$	294			$	113
Interest income recognized on cash basis on nonaccrual loans		$	—			$	48			$	—

		Estimated
		Lives in
		Years		2004				2003
				(In thousands)
Land				$	313			$	50
Buildings and building improvements		30			1,185				107
Leasehold improvements		7 - 20			2,255				2,139
Furniture, fixtures and equipment		3 - 15			1,208				1,563
Computer equipment and data processing software		3 - 10			1,652				1,445
Automobiles		2 - 5			173				145
					6,786				5,449
Accumulated depreciation					(2,284	)			(1,871	)
				$	4,502			$	3,578

			Northern
			State				Purchase of
			Bank				Branches				Total
Balance as of January 1, 2003			$	—			$	—			$	—
	Goodwill acquired during the year			4,260				2,004				6,264
Balance as of December 31, 2003				4,260				2,004				6,264
	Goodwill related to branches acquired (disposed of) during the year			(1,512	)			814				(698	)
Balance as of December 31, 2004			$	2,748			$	2,818			$	5,566

F-17

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Table of Contents

2005		$	171
2006			171
2007			171
2008			171
2009			168

			2004				2003
			(In thousands)
Demand, non-interest bearing			$	27,931			$	28,125
Demand, interest bearing				12,240				12,745
Money market				13,739				21,616
Savings				53,939				49,577
Time, $100,000 and over				30,814				26,018
Time, other				105,801				101,999
	Total Deposits		$	244,464			$	240,080

2005		$	69,828
2006			25,236
2007			19,493
2008			8,328
2009			13,666
Thereafter			64
		$	136,615

F-18

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Table of Contents

		December 31,
		2004				2003
		(Dollars in thousands)
Federal Home Loan Bank overnight advances		$	23,425			$	10,187
Average balance		$	7,814			$	9,379
Maximum month-end balance		$	23,425			$	14,090
Weighted average rate			1.60	%			1.34	%
Range of interest rates paid on December 31			2.19%- 2.34	%			1.01%- 1.19	%

		December 31, 2004
						Weighted								Weighted								Weighted
		Fixed				Average				Variable				Average								Average
		Rate				Rate				Rate				Rate				Total				Rate
		(Dollars in thousands)
Due in 2005		$	7,000				2.4%			$	1,000				6.7%			$	8,000				2.9%
Due in 2006			9,000				2.8%				—								9,000				2.8%
Due in 2007			2,000				2.8%				—								2,000				2.8%
After 2009			—								9,000				4.4%				9,000				4.4%
		$	18,000				2.6%			$	10,000				4.7%			$	28,000				3.3%

		December 31, 2003
						Weighted								Weighted								Weighted
		Fixed				Average				Variable				Average								Average
		Rate				Rate				Rate				Rate				Total				Rate
		(Dollars in thousands)
Due in 2004		$	2,500				2.8%			$	—							$	2,500				2.8%
Due in 2005			2,000				3.1%				1,000				6.7%				3,000				4.3%
After 2008			—								9,000				4.4%				9,000				4.4%
		$	4,500				3.0%			$	10,000				4.7%			$	14,500				4.1%

F-19

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Table of Contents

2005		$	305
2006			274
2007			266
2008			260
2009			259
Thereafter			819
		$	2,183

F-20

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Table of Contents

F-21

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Table of Contents

			2004								2003								2002
							Weighted								Weighted								Weighted
							Average								Average								Average
							Exercise								Exercise								Exercise
			Shares				Price				Shares				Price				Shares				Price
			(Shares in thousands)
Outstanding at the beginning of year				355			$	10.55				191			$	10.50				156			$	10.50
	Granted			45			$	12.85				29			$	10.60				36			$	11.20
	Issued in connection with acquisition			—				—				174			$	10.90				—				—
	Exercised			(32	)		$	11.32				—				—				—				—
	Forfeited			(2	)		$	11.25				(39	)		$	11.97				(1	)		$	11.26
Outstanding at the end of year				366			$	10.76				355			$	10.55				191			$	10.50

As of December 31, 2004:
	Options available for grant			25,203
	Weighted average life in years of outstanding options and warrants			5.7
	Exercisable options and warrants			338,289
	Weighted average price of exercisable options and warrants		$	10.75
	Range of exercise prices		$	10.00-$12.85

F-22

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Table of Contents

				2004				2003
				(In thousands)
Deferred tax assets:
	Allowance for loan losses			$	1,034			$	1,097
	Organization costs				—				31
	Net operating loss carryforwards				799				1,846
	Compensation related				304				94
	Unrealized securities losses				103				—
	Acquisition fair value adjustment, net				—				81
	Other				65				130
					2,305				3,279
	Valuation allowance				—				(2,108	)
		Total Deferred Tax Assets, Net of Valuation Allowance			2,305				1,171
Deferred tax liabilities:
	Bank premises and equipment				(55	)			(68	)
	Deferred loan costs				(91	)			(49	)
	Cash basis conversion				(98	)			(56	)
	Acquisition fair value adjustment, net				(449	)			—
	Other				(12	)			(12	)
		Total Deferred Tax Liabilities			(705	)			(185	)
		Net Deferred Tax Asset		$	1,600			$	986

Balance, beginning			$	17,857
	Advances			8,895
	Repayments			6,560
Balance, ending			$	20,192

F-23

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Table of Contents

		December 31,				December 31,
		2004				2003
		(In thousands)
Commitments to grant loans		$	20,760			$	19,568
Unfunded commitments under lines of credit			50,020				53,752
Unfunded letters of credit			2,741				2,597
		$	73,521			$	75,917

F-24

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Table of Contents

To be Well Capitalized

Under Prompt

For Capital Adequacy

Corrective Action

Actual

Purposes

Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollar amounts in thousands)

As of December 31, 2004:

Total capital (to risk-weighted assets)

$

37,698

14.7

%

$³20,573

³8.0

%

$³25,717

³10.0

%

Tier 1 capital (to risk-weighted assets)

29,980

11.7

³10,287

³4.0

³15,430

³6.0

Tier 1 capital (to average assets)

29,980

9.4

³12,762

³4.0

³15,952

³5.0

As of December 31, 2003:

Total capital (to risk-weighted assets)

$

33,826

14.2

%

$³19,037

³8.0

%

$³23,796

³10.0

%

Tier 1 capital (to risk-weighted assets)

26,061

11.0

³ 9,518

³4.0

³14,277

³6.0

Tier 1 capital (to average assets)

26,061

9.1

³11,493

³4.0

³14,366

³5.0

F-25

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Table of Contents

	Cash and Cash Equivalents

	Securities

	Loans

	Accrued Interest Receivable

	Deposits

	Short-Term Borrowings

	Long-Term Debt and Subordinated Debentures

F-26

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Table of Contents

	Accrued Interest Payable

	Unfunded Lending Commitments and Letters of Credit

			2004								2003
			Carrying				Fair				Carrying				Fair
			Amount				Value				Amount				Value
			(In thousands)
Financial assets:
	Cash and due from banks		$	5,305			$	5,305			$	8,709			$	8,709
	Short-term investments and federal funds sold			1,890				1,890				21				21
	Securities available for sale			51,098				51,098				43,184				43,184
	Securities held to maturity			12,013				11,930				12,500				12,450
	Loans receivable, net			249,019				256,207				226,155				237,354
	Accrued interest receivable			1,437				1,437				1,242				1,242
Financial liabilities:
	Deposits			244,464				247,771				240,080				242,999
	Short-term borrowings			23,425				23,425				10,187				10,187
	Long-term Federal Home Loan Bank borrowings			28,000				28,250				14,500				15,171
	Convertible subordinated debentures			4,500				4,317				4,785				4,479
	Accrued interest payable			213				213				148				148
Off balance sheet financial instruments, unfunded lending commitments and letters of credit				—				—				—				—

F-27

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Table of Contents

			Northern				Leesport Branch
			State Bank				Purchases
			(In thousands)
Assets
	Cash and cash equivalents		$	6,705			$	31,226
	Investment securities			14,782				—
	Net loans			65,464				23,902
	Premises and equipment, net			1,456				917
	Goodwill			4,260				2,004
	Intangible assets			36				1,568
	Other assets			606				59
Total Assets Acquired				93,309				59,676
Liabilities
	Deposits			76,276				59,508
	Borrowed funds			2,997				—
	Other liabilities			1,176				168
	Total Liabilities Assumed			80,449			$	59,676
	Net Assets (Liabilities) Acquired		$	12,860

F-28

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Table of Contents

Item 1.	Financial Statements

				September 30,				December 31,
				2005				2004
				(Unaudited)
				(In thousands, except share
				amounts)
ASSETS
Cash and due from banks				$	5,624			$	5,305
Federal funds sold					309				1,868
Short-term investments					22				22
		Cash and Cash Equivalents			5,955				7,195
Securities:
	Available for sale				60,492				51,098
	Held to maturity				10,049				12,013
		Total Securities			70,541				63,111
Total loans					283,252				252,480
	Less: Allowance for loan losses				(3,254	)			(3,461	)
		Net Loans			279,998				249,019
Premises and equipment, net					5,510				4,502
Goodwill					6,481				5,566
Other intangible assets					1,384				1,375
Accrued interest receivable					1,912				1,437
Bank owned life insurance					7,769				4,540
Other assets					2,589				1,845
		Total Assets		$	382,139			$	338,590
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
	Non-interest bearing			$	30,694			$	27,931
	Interest-bearing				257,542				216,533
		Total Deposits			288,236				244,464
Short-term borrowings					7,575				23,425
Long-term FHLB borrowings					44,000				28,000
Convertible subordinated debentures					4,442				4,500
Other liabilities					1,373				1,476
		Total Liabilities			345,626				301,865
Shareholders’ Equity
		Preferred stock, $5 par value; authorized 1,000,000 shares; none issued and outstanding			—				—
		Common stock, $5 par value; authorized 5,000,000 shares; 3,636,949 shares issued and 3,527,322 outstanding at September 30, 2005; 3,609,417 shares issued and outstanding at December 31, 2004			18,185				18,047
		Surplus			19,505				19,327
		Retained earnings (deficit)			811				(453	)
		Accumulated other comprehensive loss			(426	)			(196	)
		Treasury stock, 109,627 shares at September 30, 2005 and 0 shares at December 31, 2004			(1,562	)			—
		Total Shareholders’ Equity			36,513				36,725
		Total Liabilities and Shareholders’ Equity		$	382,139			$	338,590

F-29

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Table of Contents

				Three Months								Nine Months
				Ended								Ended
				September 30,								September 30,
				2005				2004				2005				2004
				(In thousands, except per share amounts)
				(Unaudited)
Interest Income
	Loans receivable, including fees			$	4,617			$	3,608			$	12,773			$	10,590
	Securities				619				456				1,698				1,368
	Other				1				2				30				6
		Total Interest Income			5,237				4,066				14,501				11,964
Interest Expense
	Deposits				1,829				1,071				4,875				3,131
	Short-term borrowings				76				35				163				81
	Convertible subordinated debentures				57				59				169				179
	Long-term FHLB borrowings				259				193				716				556
		Total Interest Expense			2,221				1,358				5,923				3,947
		Net Interest Income			3,016				2,708				8,578				8,017
Provision for Loan Losses					200				189				350				798
		Net Interest Income After Provision for Loan Losses			2,816				2,519				8,228				7,219
Noninterest Income
	Service charges on deposit accounts				161				132				485				443
	Asset management fees				242				200				731				605
	Service charges on loans				70				85				247				240
	Loss on sale of securities				—				—				(11	)			—
	Gain on sales of loans				—				—				214				197
	Gain on sale of branches				—				—				—				196
	Income from Bank owned life insurance				74				—				213				—
	Other				3				—				6				3
		Total Noninterest Income			550				417				1,885				1,684
Noninterest Expenses
	Salaries and employee benefits				1,439				1,267				4,400				3,993
	Occupancy and equipment				259				271				743				985
	Data processing				244				267				721				809
	Advertising, marketing and business development				37				74				112				165
	Other				708				611				2,303				2,007
		Total Noninterest Expenses			2,687				2,490				8,279				7,959
		Income Before Income Tax Expense (Benefit)			679				446				1,834				944
Income Tax Expense (Benefit)					208				(207	)			570				(621	)
		Net Income		$	471			$	653			$	1,264			$	1,565
Earnings Per Share
	Basic			$	0.13			$	0.18			$	0.35			$	0.44
	Diluted			$	0.13			$	0.17			$	0.34			$	0.43

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				Nine Months Ended September 30, 2004
																Accumulated
																Other
												Retained				Comprehensive
				Common								Earnings				Income				Treasury
				Stock				Surplus				(Deficit)				(Loss)				Stock				Total
				(Dollars in thousands)
				(Unaudited)
Balance — January 1, 2004				$	17,751			$	18,930			$	(2,808	)		$	(1	)		$	—			$	33,872
Comprehensive income:
	Net Income				—				—				1,565				—				—				1,565
	Unrealized gain (loss) on securities available for sale, net of tax of $18				—				—				—				(33	)			—				(33	)
		Total Comprehensive Income																							1,532
Options exercised, 28,600 shares					143				181				—				—				—				324
Debentures converted to 20,400 shares					102				126				—				—				—				228
Directors compensation, 4,494 shares					23				51				—				—				—				74
Balance — September 30, 2004				$	18,019			$	19,288			$	(1,243	)		$	(34	)		$	—			$	36,030

				Nine Months Ended September 30, 2005
Balance — January 1, 2005				$	18,047			$	19,327			$	(453	)		$	(196	)		$	—			$	36,725
Comprehensive income:
	Net Income				—				—				1,264				—				—				1,264
	Unrealized gain (loss) on securities available for sale, net of tax of $118				—				—				—				(230	)			—				(230	)
		Total Comprehensive Income																							1,034
Options exercised, 17,220 shares					86				97				—				—				—				183
Debentures converted, 4,600 shares					23				34				—				—				—				57
Directors compensation, 5,712 shares					29				47				—				—				—				76
Purchase of treasury stock, 109,627 shares					—				—				—				—				(1,562	)			(1,562	)
Balance — September 30, 2005				$	18,185			$	19,505			$	811			$	(426	)		$	(1,562	)		$	36,513

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						Nine Months Ended
						September 30,
						2005				2004
						(Unaudited, in
						thousands)
	Cash Flows from Operating Activities
		Net income				$	1,264			$	1,565
		Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for loan losses					350				798
		Provision for depreciation and amortization					407				562
		Amortization of intangible assets					148				130
		Net amortization of investment securities					463				575
		Deferred income taxes (benefit)					374				(621	)
		Stock issued for directors’ compensation					76				74
		Securities losses (gains)					11				—
		Gains on sale of loans					(214	)			(197	)
		Gain on sale of branches					—				(196	)
		Earnings on Bank owned life insurance					(213	)			—
		Decrease (increase) in accrued interest receivable and other assets					(1,597	)			62
		Increase (decrease) in other liabilities					(480	)			(278	)
				Net Cash Provided by Operating Activities			589				2,474
	Cash Flows from Investing Activities
		Securities available for sale:
			Purchases				(32,330	)			(8,885	)
			Proceeds from sales				9,529				1,834
			Proceeds from maturities of and principal repayments				12,826				11,880
		Securities held to maturity:
			Purchases				—				(2,000	)
			Proceeds from maturities of and principal repayments				1,840				1,839
		Net increase in loans receivable					(21,747	)			(39,332	)
		Proceeds from sale of loans					3,410				2,642
		Purchase of loans					(7,711	)			(10,329	)
		Increase in cash from branch sale/acquisition					7,505				9,093
		Purchase of Bank owned life insurance					(3,016	)			(4,500	)
		Purchases of bank premises and equipment					(966	)			(1,785	)
				Net Cash Used in Investing Activities			(30,660	)			(39,543	)
	Cash Flows from Financing Activities
		Net increase (decrease) in deposits					30,060				27,115
		Net increase (decrease) in short-term borrowings					(15,850	)			(3,187	)
		Proceeds from long-term borrowings					19,000				9,500
		Repayments of long-term borrowings					(3,000	)			—
		Payments to purchase treasury stock					(1,562	)			—
		Net proceeds from exercised stock options					183				324
				Net Cash Provided by Financing Activities			28,831				33,752
				Net (Decrease) in Cash and Cash Equivalents			(1,240	)			(3,317	)
	Cash and Cash Equivalents — Beginning						7,195				8,730
	Cash and Cash Equivalents — Ending					$	5,955			$	5,413
SUPPLEMENTARY CASH FLOWS INFORMATION
		Interest paid				$	5,878			$	3,957
		Income taxes paid				$	355			$	52
		Debentures converted in common stock				$	57			$	228

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	Principles of Consolidation

	Stock Compensation Plans

			Three Months
			Ended
			September 30,
			2005				2004
			(In thousands,
			except per share
			data)
Net income, as reported			$	471			$	653
Total stock-based compensation expense determined under fair value method, net of tax				(5	)			(15	)
Pro forma net income			$	466			$	638
Earnings per share — basic:
	As reported		$	0.13			$	0.18
	Pro forma		$	0.13			$	0.18
Earnings per share — diluted:
	As reported		$	0.13			$	0.17
	Pro forma		$	0.13			$	0.17

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			Nine Months
			Ended
			September 30,
			2005				2004
			(In thousands,
			except per share
			data)
Net income, as reported			$	1,264				1,565
Total stock-based compensation expense determined under fair value method, net of tax				(233	)			(179	)
Pro forma net income			$	1,031			$	1,386
Earnings per share — basic:
	As reported		$	0.35			$	0.44
	Pro forma		$	0.29			$	0.39
Earnings per share — diluted:
	As reported		$	0.34			$	0.43
	Pro forma		$	0.28			$	0.38

	Earnings per Common Share

		Three Months
		Ended
		September 30,
		2005				2004
		(In thousands)
Net income		$	471			$	653
Average number of common shares outstanding			3,584				3,598
Effect of dilutive options and warrants			127				141
Average number of common shares outstanding used to calculate diluted earnings per common share			3,711				3,739

		Nine Months
		Ended
		September 30,
		2005				2004
		(In thousands)
Net income		$	1,264			$	1,565
Average number of common shares outstanding			3,603				3,574
Effect of dilutive options and warrants			119				105
Average number of common shares outstanding used to calculate diluted earnings per common share			3,722				3,679

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Note 4 —	Branch Acquisition and Branch Opening

Note 5 —	New Accounting Guidance

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F-36

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					Page
ARTICLE I CERTAIN DEFINITIONS						A-4
	1.1		Certain Definitions			A-4
ARTICLE II THE MERGER						A-10
	2.1		The Merger			A-10
	2.2		Effective Date and Effective Time; Closing			A-11
ARTICLE III MERGER CONSIDERATION; EXCHANGE PROCEDURES						A-11
	3.1		Conversion of Shares			A-11
	3.2		Fractional Shares			A-12
	3.3		Election and Proration Procedures			A-12
	3.4		Exchange Procedures			A-15
	3.5		Adjustments for Dilution and Other Matters			A-16
	3.6		Dissenting Shares			A-16
	3.7		Withholding Rights			A-16
	3.8		Legacy Options, Warrants and Convertible Debentures			A-17
	3.9		Trust Company Merger			A-18
ARTICLE IV ACTIONS PENDING CLOSING						A-18
	4.1		Forbearances of Legacy			A-18
	4.2		Forbearances of Parent			A-21
ARTICLE V REPRESENTATIONS AND WARRANTIES						A-21
	5.1		Disclosure Schedules			A-21
	5.2		Standard			A-21
	5.3		Representations and Warranties of Legacy			A-22
	5.4		Representations and Warranties of Parent			A-33
ARTICLE VI COVENANTS						A-38
	6.1		Commercially Reasonable Efforts			A-38
	6.2		Stockholders Meeting			A-38
	6.3		Registration Statement			A-38
	6.4		Regulatory Filings			A-39
	6.5		Press Releases			A-39
	6.6		Access; Information			A-39
	6.7		Affiliates			A-40
	6.8		Certain Actions			A-40
	6.9		Certain Policies			A-42
	6.10		NYSE Listing			A-42
	6.11		Indemnification			A-42
	6.12		Benefit Plans			A-43
	6.13		Parent Bank Board			A-44
	6.14		Notification of Certain Matters			A-44
	6.15		Regulatory Conditions			A-44
	6.16		Exemption From Liability Under Section 16(b)			A-45

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					Page
	6.17		Certain Post-Closing Matters			A-45
	6.18		Employment Matters			A-45
	6.19		Director Agreements			A-45
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER						A-46
	7.1		Conditions to Each Party’s Obligation to Effect the Merger			A-46
	7.2		Conditions to Obligation of Legacy			A-46
	7.3		Conditions to Obligation of Parent			A-47
ARTICLE VIII TERMINATION						A-47
	8.1		Termination			A-47
	8.2		Effect of Termination			A-49
ARTICLE IX MISCELLANEOUS						A-49
	9.1		Survival			A-49
	9.2		Waiver; Amendment			A-49
	9.3		Counterparts			A-49
	9.4		Governing Law			A-49
	9.5		Expenses			A-49
	9.6		Notices			A-50
	9.7		Entire Understanding; No Third Party Beneficiaries			A-50
	9.8		Severability			A-50
	9.9		Enforcement			A-51
	9.10		Interpretation			A-51
	9.11		Assignment			A-51
	9.12		Alternative Structure			A-51
ANNEX A — Form of Trust Company Merger Agreement						A-53
ANNEX B — Form of Affiliate Letter						A-57
ANNEX C — Form of Voting Agreement						A-60
ANNEX D — Form of Employment Agreements						A-63

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	“Acquisition Proposal” has the meaning set forth in Section 6.8(e)(i).
	“Affiliate” has the meaning set forth in Section 3.4(h) and in Section 6.7.
	“Affiliate Letter” has the meaning set forth in Section 6.7.
	“Agreement” means this Agreement, as amended or modified from time to time in accordance with Section 9.2.
	“Approval Recommendation” has the meaning set forth in Section 6.2.
	“Articles of Combination” has the meaning set forth in Section 2.2(a).
	“Articles of Merger” has the meaning set forth in Section 2.2(a).
	“Average Closing Price” as of any specified date shall mean the average composite closing price of Parent Common Stock on the NYSE as reported in “New York Stock Exchange Composite Transactions” in The Wall Street Journal (Eastern Edition) for each of the twenty consecutive trading days ending on and including the fifth such trading day prior to the specified date rounded to the nearest whole cent.
	“Bank Insurance Fund” means the Bank Insurance Fund maintained by the FDIC.

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	“Bank Regulatory Authority” means the Federal Reserve Board, the OCC, the FDIC, the Department and any other state or federal bank regulatory agency charged with the supervision or regulation of Legacy, Parent or Parent Bank or the insurance of the deposits of Legacy or Parent Bank.
	“Bank Secrecy Act” means the Bank Secrecy Act of 1970, as amended.
	“Banking Code” means the Pennsylvania Banking Code of 1965, as amended.
	“Benefit Plans” has the meaning set forth in Section 5.3(m)(i).
	“Break-up Fee” has the meaning set forth in Section 6.8(f).
	“Business Day” means Monday through Friday of each week, except a legal holiday recognized as such by the U.S. Government or any day on which banking institutions in the Commonwealth of Pennsylvania are authorized or obligated to close.
	“Cash Amount” means that portion of the Merger Consideration not consisting of Parent Common Stock.
	“Cash Election” has the meaning set forth in Section 3.3(a).
	“Cash Proration Factor” has the meaning set forth in Section 3.3(c)(iii)(C).
	“Certificate” means any certificate that immediately prior to the Effective Time represented shares of Legacy Common Stock.
	“Change in Legacy Recommendation” has the meaning set forth in Section 6.8(b).
	“Closing” and “Closing Date” have the meanings set forth in Section 2.2(b).
	“Code” has the meaning set forth in the recitals to this Agreement.
	“Combination Cash Election” has the meaning set forth in Section 3.3(a).
	“Combination Stock Election” has the meaning set forth in Section 3.3(a).
	“Community Reinvestment Act” means the Community Reinvestment Act of 1977, as amended.
	“Confidentiality Agreements” has the meaning set forth in Section 6.6(c).
	“Department” means the Pennsylvania Department of Banking.
	“Derivatives Contract” has the meaning set forth in Section 5.3(q).
	“Determination Date” means the date on which the last required Bank Regulatory Authority is obtained with respect to the Transaction, without regard to a requisite waiting period.
	“Disclosure Schedule” has the meaning set forth in Section 5.1.
	“Dissenting Shares” means shares of Legacy Common Stock as to which appraisal rights are perfected under Section 215a of the National Bank Act.
	“DOL” means the Department of Labor.
	“DRSP Plan” has the meaning set forth in Section 3.1(e).
	“Effective Date” has the meaning set forth in Section 2.2(a).
	“Effective Time” has the meaning set forth in Section 2.2(a).
	“Election” has the meaning set forth in Section 3.3(a).
	“Election Deadline” has the meaning set forth in Section 3.3(b).
	“Election Form” has the meaning set forth in Section 3.3(a).
	“Election Form Record Date” has the meaning set forth in Section 3.3(a).

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	“Employees” has the meaning set forth in Section 5.3(m)(i).
	“Employment Agreements” means the Employment Agreements between Parent Bank and each of George H. Groves, Thomas W. Lennox and Joseph L. Paese in the form of Annex D.
	“Environmental Laws” has the meaning set forth in Section 5.3(o)(i).
	“Equal Credit Opportunity Act” means the Equal Credit Opportunity Act, as amended.
	“Equity Investment” means (i) an Equity Security, (ii) any ownership interest in any company or other entity, any membership interest that includes a voting right in any company or other entity or any interest in real estate or (iii) any investment or transaction that in substance falls into any of these categories even though it may be structured as some other form of investment or transaction.
	“Equity Security” means any stock (other than adjustable-rate preferred stock, money market (auction rate) preferred stock or other instrument determined by the OCC to have the character of debt securities), certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, or voting-trust certificate; any security convertible into such a security; any security carrying any warrant or right to subscribe to or purchase any such security and any certificate of interest or participation in, any temporary or interim certificate for or receipt for any of the foregoing.
	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
	“ERISA Affiliate” has the meaning set forth in Section 5.3(m)(iii).
	“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
	“Exchange Agent” means such entity selected by Parent to effect the exchange of Legacy Common Stock for Parent Common Stock and/or cash.
	“Exchange Fund” has the meaning set forth in Section 3.4(a).
	“Exchange Ratio” shall mean 1.00, subject to adjustment pursuant to Section 3.5.
	“Fair Housing Act” means the Fair Housing Act, as amended.
	“FDIC” means the Federal Deposit Insurance Corporation.
	“Federal Reserve Act” means the Federal Reserve Act, as amended.
	“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.
	“GAAP” means generally accepted accounting principles and practices as in effect from time to time in the United States.
	“Governmental Authority” means any federal, state or local court, administrative agency or commission or other governmental authority or instrumentality.
	“Hazardous Substance” has the meaning set forth in Section 5.3(o)(i).
	“Home Mortgage Disclosure Act” means the Home Mortgage Disclosure Act, as amended.
	“Indemnified Parties” and “Indemnifying Party” have the meanings set forth in Section 6.11(a).
	“Index Closing Price” means the average closing price of the Nasdaq Bank Index for each of the 20 consecutive trading days ending on and including the second such trading day prior to the Determination Date rounded to the nearest whole cent.
	“Index Ratio” has the meaning set forth in Section 8.01(h)(ii).
	“Insurance Amount” has the meaning set forth in Section 6.11(c).
	“Insurance Policies” has the meaning set forth in Section 5.3(w).

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	“IRS” means the Internal Revenue Service.
	“Legacy” has the meaning set forth in the preamble to this Agreement.
	“Legacy Advisory Board” has the meaning set forth in Section 6.17(c).
	“Legacy Articles” means the Articles of Incorporation of Legacy, as amended.
	“Legacy Board” means the Board of Directors of Legacy.
	“Legacy Bylaws” means the Bylaws of Legacy, as amended.
	“Legacy Common Stock” means the common stock, par value $5.00 per share, of Legacy.
	“Legacy Convertible Debentures” mean the outstanding convertible debentures of Legacy that are convertible into an aggregate of 355,400 shares of Legacy Common Stock.
	“Legacy Group” means any “affiliated group”, as defined in Section 1504(a) of the Code without regard to the limitations contained in Section 1504(b) of the Code, that includes Legacy and its Subsidiaries or any predecessor of or any successor to Legacy, or to another such predecessor or successor.
	“Legacy Insiders” means those officers, directors and 10% or greater stockholders of Legacy who are subject to the reporting requirements of Section 16(a) of the Exchange Act and who are listed in the Section 16 Information.
	“Legacy Loan Property” has the meaning set forth in Section 5.3(o)(i).
	“Legacy Meeting” has the meaning set forth in Section 6.2.
	“Legacy Options” means the options to acquire Legacy Common Stock issued under the Legacy Stock Option Plans.
	“Legacy Parent Bank Designee” has the meaning set forth in Section 6.13(b).
	“Legacy Preferred Stock” means the preferred stock, par value $5.00 per share, of Legacy.
	“Legacy Regulatory Authorities” has the meaning set forth in Section 5.3(i)(i).
	“Legacy Stock Option Plans” means Legacy’s 1999 Equity Incentive Stock Option Plan for Organizers, 1999 Equity Incentive Stock Option Plan, as amended, 1999 Directors’ Compensation Plan, as amended and Northern State Bank’s 1999 Stock Incentive Plan.
	“Legacy Warrants” means Northern State Bank’s Transferable Stock Purchase Warrants, as amended, and Northern State Bank’s Non-Transferable Stock Purchase Warrants, as amended.
	“Liens” means any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance.
	“Loans” has the meaning set forth in Section 4.1(q).
	“Mailing Date” has the meaning set forth in Section 3.3(a).
	“Material Adverse Effect” means, with respect to Parent or Legacy any effect that (i) is material and adverse to the financial position, results of operations or business of Parent and its Subsidiaries taken as a whole or Legacy and its Subsidiaries taken as a whole, as the case may be, or (ii) would materially impair the ability of any of Parent and its Subsidiaries or Legacy and its Subsidiaries to perform their respective obligations under this Agreement and the Trust Company Merger Agreement or otherwise materially impede the consummation of the Transaction; provided, however, that Material Adverse Effect shall not be deemed to include the impact of (a) changes after the date hereof in banking and similar laws of general applicability or interpretations thereof by Governmental Authorities, (b) changes after the date hereof in GAAP or regulatory accounting requirements applicable to banks, federal savings institutions and their holding companies generally, (c) changes after the date hereof in general economic

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	or market conditions affecting banks and their holding companies generally, including changes in interest rates, (d) public disclosure of the Transaction contemplated hereby, (e) costs incurred in connection with the Transaction including, without limitation, change in control and severance payments, investment banking fees, legal fees, accounting fees and printing costs, in each case in accordance with GAAP and (f) any action or omission of Legacy or Parent taken with the prior consent of the other or as otherwise contemplated by this Agreement in connection with the consummation of the Transaction.
	“Material Contract” has the meaning set forth in Section 5.3(k)(i).
	“Merger” has the meaning set forth in Section 2.1(a).
	“Merger Consideration” means the number of whole shares of Parent Common Stock, cash or a combination thereof, plus cash in lieu of any fractional share interest into which shares of Legacy Common Stock shall be converted pursuant to the provisions of Article III.
	“NASD” means the National Association of Securities Dealers, Inc.
	“National Bank Act” means the National Bank Act, as amended.
	“National Labor Relations Act” means the National Labor Relations Act, as amended.
	“NYSE” means The New York Stock Exchange, Inc.
	“OCC” means the Office of the Comptroller of the Currency.
	“Option Consideration” shall have the meaning set forth in Section 3.8.
	“OREO” means other real estate owned.
	“Parent” has the meaning set forth in the preamble to this Agreement.
	“Parent Articles” means the Articles of Incorporation of Parent, as amended.
	“Parent Bank” has the meaning set forth in the preamble to this Agreement.
	“Parent Bank Board” means the Board of Directors of Parent Bank.
	“Parent Benefit Plans” has the meaning set forth in Section 6.12(a).
	“Parent Common Stock” means the common stock, $.01 par value per share, of Parent.
	“Parent Option” means an option to purchase Parent Common Stock.
	“Parent Preferred Stock” means the preferred stock, $.01 par value per share, of Parent.
	“Parent Ratio” has the meaning set forth in Section 8.1(h)(2).
	“Parent Regulatory Authorities” has the meaning set forth in Section 5.4(i)(i).
	“Parent Trust Company” means First National Trust Company.
	“Payment Event” has the meaning set forth in Section 6.8(g).
	“PBCL” means the Pennsylvania Business Corporation Law of 1988, as amended.
	“Pension Plan” has the meaning set forth in Section 5.3(m)(ii).
	“Person” means a natural Person or any legal, commercial, or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, a common enterprise, or any person acting in a representative capacity.
	“Previously Disclosed” by a party shall mean information set forth in a section of its Disclosure Schedule corresponding to the section of this Agreement where such term is used.
	“Price Per Share” means $18.40.

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	“Proxy Statement” has the meaning set forth in Section 6.3(a).
	“Registration Statement” has the meaning set forth in Section 6.3(a).
	“Representatives” has the meaning set forth in Section 6.8(a).
	“Required Vote” has the meaning set forth in Section 5.3(e).
	“Rights” means, with respect to any Person, warrants, options, rights, convertible securities and other arrangements or commitments that obligate the Person to issue or dispose of any of its capital stock or other ownership interests.
	“SEC” means the Securities and Exchange Commission.
	“Section 16 Information” means information accurate in all respects regarding the Legacy Insiders, the number of shares of Legacy Common Stock held by each such Legacy Insider and the number and description of the Legacy Options held by each such Legacy Insider.
	“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
	“Securities Documents” has the meaning set forth in Sections 5.3(g)(i) and 5.4(g)(i) in the case of Legacy and Parent, respectively.
	“Starting Date” means the trading day on the NYSE immediately preceding the day on which the parties publicly announced the signing of this Agreement.
	“Starting Index Price” means the closing price of the Nasdaq Bank Index on the Starting Date.
	“Starting Price” means the closing price of Parent Common Stock on the Starting Date, subject to adjustment pursuant to Section 3.04 and rounded to the nearest whole cent.
	“Stock Amount” means 2,468,845 shares of Parent Common Stock plus such number of additional shares of Parent Common Stock as is equal to 70% of any shares of Legacy Common Stock issued between the date hereof and the Election Deadline, subject to adjustment pursuant to Sections 3.3 and 3.5.
	“Stock Election” has the meaning set forth in Section 3.3(a).
	“Stock Proration Factor” has the meaning set forth in Section 3.3(c)(ii).
	“Subsidiary” has the meaning ascribed thereto in Rule 1-02 of Regulation S-X of the SEC.
	“Superior Proposal” has the meaning set forth in Section 6.8(e)(ii).
	“Surviving Bank” has the meaning set forth in Section 2.1(a).
	“Tax” and “Taxes” mean all federal, state, local or foreign income, gross income, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, custom duties, unemployment or other taxes of any kind whatsoever, together with any interest, additions or penalties thereto and any interest in respect of such interest and penalties.
	“Tax Returns” means any return, declaration or other report (including elections, declarations, schedules, estimates and information returns) with respect to any Taxes.
	“Third Party” has the meaning set forth in Section 6.8(g)(iv).
	“Transaction” means the Merger and any other transactions contemplated by this Agreement.
	“Treasury Shares” means shares of Legacy Common Stock held by Legacy or any of its Subsidiaries or by Parent or any of its Subsidiaries, other than in a fiduciary, including custodial or agency, capacity or as a result of debts previously contracted in good faith.

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	“Trust Company Merger” has the meaning set forth in Section 3.9.
	“Trust Company Merger Agreement” means the Agreement of Merger by and between Parent Trust Company and The Legacy Trust Company, the form of which is attached hereto as Annex A.
	“Undesignated Shares” has the meaning set forth in Section 3.3(a).

	(i) Each share of Parent Bank common stock issued and outstanding immediately prior to the Effective Time shall be unchanged and shall remain issued and outstanding.
	(ii) At the Effective Time, each share of Legacy capital stock issued and outstanding prior to the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and converted into the right to receive the Merger Consideration. Any shares of Legacy capital stock held in the treasury of Legacy immediately prior to the Effective Time shall be retired and canceled.

(i) all rights, franchises and interests of Legacy in and to every type of property (real, personal and mixed), tangible and intangible, and choses in action shall be transferred to and vested in the Surviving Bank by virtue of the Merger without any deed or other transfer, and the Surviving Bank, without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises and interests, including appointments, designations and nominations, and all other rights and

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	interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver and committee, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises and interest were held or enjoyed by Legacy immediately prior to the Effective Time; and
	(ii) the Surviving Bank shall be liable for all liabilities of Legacy, fixed or contingent, including all deposits, accounts, debts, obligations and contracts thereof, matured or unmatured, whether accrued, absolute, contingent or otherwise, and whether or not reflected or reserved against on balance sheets, books of account or records thereof, and all rights of creditors or obligees and all liens on property of Legacy shall be preserved unimpaired; after the Effective Time, the Surviving Bank will continue to issue savings accounts on the same basis as immediately prior to the Effective Time.

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	(i) Parent Common Stock equal to the Exchange Ratio;
	(ii) cash in the amount of the Price Per Share; or
	(iii) a combination of Parent Common Stock and cash as set forth in Section 3.3(a), provided that all elections shall be made as to whole shares only.

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	(i) if the aggregate number of shares of Legacy Common Stock as to which Stock Elections and Combination Stock Elections shall have effectively been made times the Exchange Ratio is approximately equal to the Stock Amount, then:

	(A) Each holder of Legacy Common Stock who made an effective Stock Election or Combination Stock Election shall receive the number of shares of Parent Common Stock that is equal to the product of the Exchange Ratio multiplied by the number of shares of Legacy Common Stock covered by such Stock Election or Combination Stock Election; and
	(B) Each holder of Legacy Common Stock who made an effective Cash Election or Combination Cash Election, and each holder of Undesignated Shares shall receive the Price Per Share in cash for each such share of Legacy Common Stock or Undesignated Share.

	(ii) if the aggregate number of shares of Legacy Common Stock as to which Stock Elections and Combination Stock Elections shall have effectively been made times the Exchange Ratio exceeds, and is not approximately equal to, the Stock Amount, then Parent shall have the option to issue Parent Common Stock in accordance with such elections. If Parent chooses not to exercise such option, then:

	(A) Each holder of Legacy Common Stock who made an effective Cash Election or Combination Cash Election shall receive the Price Per Share in cash for each such share of Legacy Common Stock;

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	(B) Each holder of Undesignated Shares shall be deemed to have made Cash Elections and shall receive the Price Per Share in cash for each such Undesignated Share; and
	(C) A stock proration factor (the “Stock Proration Factor”) shall be determined by dividing (1) the Stock Amount by (2) the product of the Exchange Ratio and the number of shares of Legacy Common Stock with respect to which effective Stock Elections and Combination Stock Elections were made. Each holder of Legacy Common Stock who made an effective Stock Election or Combination Stock Election shall be entitled to:

	(1) the number of shares of Parent Common Stock equal to the product of (x) the Exchange Ratio, multiplied by (y) the number of shares of Legacy Common Stock covered by such Stock Election or Combination Stock Election, multiplied by (z) the Stock Proration Factor, and
	(2) cash in an amount equal to the product of (x) the Price Per Share, multiplied by (y) the number of shares of Legacy Common Stock covered by such Stock Election or Combination Stock Election, multiplied by (z) one minus the Stock Proration Factor.

	(iii) if the aggregate number of shares of Legacy Common Stock as to which Stock Elections and Combination Stock Elections shall have effectively been made times the Exchange Ratio is less than, and is not approximately equal to, the Stock Amount, then:

	(A) Each holder of Legacy Common Stock who made an effective Stock Election or Combination Stock Election shall receive the number of shares of Parent Common Stock equal to the product of the Exchange Ratio multiplied by the number of shares of Legacy Common Stock covered by such Stock Election or Combination Stock Election;
	(B) The Exchange Agent shall select, by pro rata allocation according to the number of Legacy shares held, among those holders of Undesignated Shares (other than holders of Undesignated Shares who voted against or gave notice to the presiding officer of the Legacy Meeting at or prior to the Legacy Meeting that the holder dissents from the Merger as required by Section 215a of the National Bank Act), such number of shares of Parent Common Stock as shall be necessary so that the shares of Parent Common Stock to be received by those holders, when combined with the number of shares for which a Stock Election or Combination Stock Election has been made, multiplied by the Exchange Ratio shall be approximately equal to the Stock Amount. If all of said Undesignated Shares plus all shares as to which Stock Elections and Combination Stock Elections have been made together multiplied by the Exchange Ratio are less than, and not approximately equal to, the Stock Amount, then:
	(C) A cash proration factor (the “Cash Proration Factor”) shall be determined by dividing (1) the amount which is the difference between (x) the number obtained by dividing the Stock Amount by the Exchange Ratio and (y) the sum of the number of shares of Legacy Common Stock with respect to which effective Stock Elections and Combination Stock Elections were made and the number of Undesignated Shares selected pursuant to subparagraph (iii)(B) above by (2) the number of shares of Legacy Common Stock with respect to which effective Cash Elections and Combination Cash Elections were made. Each holder of Legacy Common Stock who made an effective Cash Election or Combination Cash Election shall be entitled to:

	(1) cash equal to the product of (x) the Price Per Share, multiplied by (y) the number of shares of Legacy Common Stock covered by such Cash Election or Combination Cash Election, multiplied by (z) one minus the Cash Proration Factor, and
	(2) the number of shares of Parent Common Stock equal to the product of (x) the Exchange Ratio, multiplied by (y) the number of shares of Legacy Common Stock covered by such Cash Election or Combination Cash Election, multiplied by (z) the Cash Proration Factor.

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	(iv) The prorata allocation process to be used by the Exchange Agent shall consist of such procedures as Parent and Legacy shall mutually determine.

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	(a) Ordinary Course.

	(i) Conduct its business other than in the ordinary and usual course consistent with past practice or fail to use commercially reasonable efforts to preserve intact its business organization and advantageous business relationships;
	(ii) Fail to use commercially reasonable efforts to keep available the present services of its employees and preserve for itself and Parent the goodwill of the customers of Legacy and its Subsidiaries and others with whom business relations exist; and
	(iii) Take any action that would adversely affect or materially delay the ability of either Legacy or Parent to obtain any necessary approvals of any regulatory agency required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby.

	(b) Capital Stock. Other than pursuant to Rights set forth on Schedule 4.1(b) of the Legacy Disclosure Schedule and outstanding on the date hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of stock or any Rights or (ii) permit any additional shares of stock to become subject to grants of employee or director stock options or other Rights.
	(c) Dividends; Etc.

	(i) Make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any other distribution on any shares of Legacy capital stock, other than dividends from wholly owned Subsidiaries to Legacy or another wholly owned Subsidiary of Legacy; or

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	(ii) Directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock.

(d) Compensation; Employment Agreements; Etc. Enter into or amend or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer or employee of Legacy or its Subsidiaries or grant any salary or wage increase or increase any employee benefit, including discretionary or other incentive or bonus payments, except in accordance with the terms of any applicable Legacy incentive plan, or accelerate the vesting of any unvested stock options, except:

	(i) for normal increases in compensation and bonuses to employees in the ordinary course of business consistent with past practice, provided that no such increases shall result in an annual aggregate adjustment in compensation or bonus of more than 3.5%, provided, however, that no increase for any individual shall result in an annual adjustment in compensation or bonus of more than 5%, unless mutually agreed to by Legacy and Parent;
	(ii) for other changes that are required by applicable law or are advisable in order to comply with Section 409A of the Code;
	(iii) to pay the amounts or to provide payments under plans and/or commitments set forth in Schedule 4.1(d) of the Legacy Disclosure Schedule;
	(iv) for retention bonuses to such persons and in such amounts as are mutually agreed by Parent and Legacy, provided, however, that the aggregate amount of such retention bonuses shall not exceed $200,000 unless mutually agreed to by Legacy and Parent;
	(v) severance payments pursuant to the severance agreements or employment agreements that are set forth in Schedule 4.1(d) of the Legacy Disclosure Schedule; or
	(vi) for grants of awards to newly hired employees consistent with past practice.

	(e) Hiring. Hire any person as an employee of Legacy or any of its Subsidiaries or promote any employee, except (i) to satisfy contractual obligations existing as of the date hereof and set forth on Schedule 4.1(e) of the Legacy Disclosure Schedule, or (ii) to fill any vacancies existing as of the date hereof and described in Schedule 4.1(e) of the Legacy Disclosure Schedule or (iii) to fill any vacancies arising after the date hereof at a comparable level of compensation with persons whose employment is terminable at the will of Legacy or a Subsidiary of Legacy, as applicable, provided, however, that such total compensation may not exceed $40,000.
	(f) Benefit Plans. Enter into, establish, adopt, amend or make any contributions to, except (i) as may be required by applicable law or (ii) to satisfy contractual obligations existing as of the date hereof and set forth on Schedule 4.1(f) of the Legacy Disclosure Schedule, any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement or similar arrangement related thereto, in respect of any director, officer or employee of Legacy or its Subsidiaries or take any action to accelerate the vesting or exercisability of stock options, restricted stock or other compensation or benefits payable thereunder.
	(g) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties except in the ordinary course of business consistent with past practice and in a transaction that, together with all other such transactions, is not material to Legacy and its Subsidiaries taken as a whole.
	(h) Acquisitions. Acquire, other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice, all or any portion of the assets, business, deposits or properties of any other entity.
	(i) Capital Expenditures. Make any capital expenditures other than capital expenditures in the ordinary course of business consistent with past practice in amounts not exceeding $15,000 individually or

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	$50,000 in the aggregate, provided, however, that if Parent does not object to a written request for approval within two business days after receipt, the request shall be deemed approved.
	(j) Governing Documents. Amend the Legacy Articles or the Legacy Bylaws or the articles of incorporation or bylaws (or equivalent documents) of any Subsidiary of Legacy, except as may be required by law.
	(k) Accounting Methods. Implement or adopt any change in its tax accounting or financial accounting principles, practices or methods, other than as may be required by changes in laws or regulations or GAAP.
	(l) Contracts. Except in the ordinary course of business consistent with past practice or as otherwise permitted under this Section 4.1, enter into or terminate any Material Contract or amend or modify in any material respect any of its existing Material Contracts.
	(m) Claims. Enter into any settlement or similar agreement with respect to any action, suit, proceeding, order or investigation to which Legacy or any of its Subsidiaries is or becomes a party, which settlement, agreement or action involves payment by Legacy or any of its Subsidiaries of an amount that exceeds $50,000 and/or would impose any material restriction on the business of Legacy or any of its Subsidiaries or create precedent for claims that are reasonably likely to be material to Legacy and its Subsidiaries taken as a whole.
	(n) Banking Operations. Enter into any new material line of business; change its material lending, investment, underwriting, risk and asset liability management and other material banking and operating policies, except as required by applicable law, regulation or policies imposed by any Governmental Authority; or file any application or make any contract with respect to opening or closing a branching or site location or branching or site relocation.
	(o) Indebtedness. (i) Incur any indebtedness for borrowed money, other than deposits, federal funds purchased, cash management accounts, Federal Home Loan Bank borrowings that mature within one year and securities sold under agreements to repurchase that mature within 90 days, in each case in the ordinary course of business consistent with past practice, or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other Person, other than in the ordinary course of business consistent with past practice or (ii) prepay any indebtedness.
	(p) Investment Securities. (i) Acquire, other than by way of foreclosures or acquisitions in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary course of business consistent with past practice, any debt security or Equity Investment other than federal funds or United States Government securities or United States Government agency securities, in each case with a term of one (1) year or less, (ii) restructure or materially change its investment securities portfolio or its gap position or (iii) enter in any Derivatives Contract, provided, however, that if Parent does not object to a written request for approval within two business days after receipt, the request shall be deemed approved.
	(q) Loans. Make, renew or otherwise modify any loan, loan commitment, letter of credit or other extension of credit (individually, a “Loan” and collectively, “Loans”) to any Person if, immediately after making an unsecured Loan or Loans, such Person would be indebted to Legacy in an aggregate amount in excess of $250,000, or make any fully secured Loan or Loans to any Person (except for any Loan secured by a first mortgage on single family owner-occupied real estate) if, immediately after making a secured Loan, such Person would be indebted to Legacy in an aggregate amount in excess of $2,000,000 or, without approval of Parent, shall not make, renew or otherwise modify any Loan or Loans secured by an owner-occupied 1-4 single-family residence with a principal balance in excess of $500,000 or in any event if such Loan does not conform with Legacy’s Credit Policy Manual if, in the case of any of the foregoing types of Loan or Loans, Parent shall object thereto within three business days after receipt of notice of such proposed Loan, and the failure to provide a written objection within three business days after receipt of notice of such proposed Loan from Legacy shall be deemed as the approval of Parent to make such Loan or Loans.

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	(r) Investments in Real Estate. Make any investment or commitment to invest in real estate or in any real estate development project, other than by way of foreclosure or acquisitions in a bona fide fiduciary capacity or in satisfaction of a debt previously contracted in good faith, in each case in the ordinary course of business consistent with past practice.
	(s) Adverse Actions. Take any action that (i) would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, (ii) is intended or is reasonably likely to result in (x) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (y) any of the conditions to the Merger set forth in Article VII not being satisfied or (z) a material violation of any provision of this Agreement or the Trust Company Merger Agreement, except as may be required by applicable law or regulation and (iii) would adversely affect or materially delay the ability of either Parent or Legacy to obtain any necessary approvals required of any regulatory agency for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby.
	(t) Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing.

	(a) Adverse Actions. Take any action that (i) would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, (ii) is intended or is reasonably likely to result in (x) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (y) any of the conditions to the Merger set forth in Article VII not being satisfied or (z) a material violation of any provision of this Agreement or the Trust Company Merger Agreement, except as may be required by applicable law or regulation or (iii) would adversely affect or materially delay the ability of either Parent or Legacy to obtain any necessary approvals required of any regulatory agency for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or to consummate the transactions contemplated hereby.
	(b) Commitments. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing.

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	(a) Organization, Standing and Authority. Legacy is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. Legacy is duly qualified to do business and is in good standing in each jurisdiction where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. Legacy has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as now conducted.
	(b) Legacy Capital Stock. The authorized capital stock of Legacy consists of (i) 5,000,000 shares of Legacy Common Stock, of which 3,526,922 shares are issued and outstanding as of the date hereof and options to purchase 366,000 shares are outstanding as of the date hereof and (ii) 1,000,000 shares of Preferred Stock, of which no shares are issued and outstanding as of the date hereof. As of the date hereof, 109,627 shares of Legacy Common Stock were held in treasury by Legacy or otherwise directly or indirectly owned by Legacy. Legacy also has outstanding Legacy Warrants exercisable for the purchase of 38,080 shares of Legacy Common Stock and Legacy Convertible Debentures convertible into an aggregate of 355,400 shares of Legacy Common Stock. The outstanding shares of Legacy Common Stock, the Legacy Warrants and the Legacy Convertible Debentures have been duly authorized and validly issued and are fully paid and non-assessable, and neither the outstanding shares of Legacy Common Stock have been nor the shares of Legacy Common Stock issuable upon exercise of the Legacy Warrants or the conversion of the Legacy Convertible Debentures will be upon issuance, issued in violation of the preemptive rights of any Person. Schedule 5.3(b) of the Legacy Disclosure Schedule sets forth for each Legacy Option the name of the grantee, the date of the grant, the type of grant, the status of the option grant as qualified or non-qualified under Section 422 of the Code (with respect to the Legacy Options), the number of shares of Legacy Common Stock subject to each Legacy Option, the number of shares of Legacy Common Stock subject to Legacy Options that are currently exercisable and the exercise price per share. Except as set forth in the preceding sentences of this Section 5.3(b) and the Legacy Rights as set forth in Schedule 5.3(b) of the Legacy Disclosure Schedule there are no shares of Legacy Common Stock reserved for issuance, Legacy does not have any Rights issued or outstanding with respect to Legacy Common Stock and Legacy does not have any commitment to authorize, issue or sell any Legacy Common Stock or Rights.
	(c) Subsidiaries.

(i) (A) Schedule 5.3(c) of the Legacy Disclosure Schedule sets forth a list of all of its Subsidiaries together with the jurisdiction of organization of each such Subsidiary; (B) except as set forth on Schedule 5.3(c) of the Legacy Disclosure Schedule, Legacy owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries; (C) no equity securities of any of its Subsidiaries are or may become required to be issued (other than to Legacy) by reason of any Right or otherwise; (D) there are no contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities other than to Legacy or any of its wholly owned Subsidiaries; (E) there are no contracts, commitments, understandings or arrangements relating to Legacy’s rights to vote or to dispose of such equity securities of Legacy’s subsidiaries and (F) all the equity securities of Legacy’s Subsidiaries held by Legacy or its Subsidiaries are fully paid and nonassessable and are owned by Legacy or its Subsidiaries free and clear of any Liens.

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	(ii) Except as set forth in Schedule 5.3(c) of the Legacy Disclosure Schedules and except for securities and other interests held in a fiduciary capacity and beneficially owned by third parties or taken in consideration of debts previously contracted, ownership interests in Legacy’s Subsidiaries and stock in the Federal Home Loan Bank of Pittsburgh, Legacy does not own beneficially, directly or indirectly, any equity securities or similar interests of any Person or any interest in a partnership or joint venture of any kind.
	(iii) Each of Legacy’s Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified.
	(iv) The deposit accounts of Legacy are insured by the Bank Insurance Fund, in the manner and to the maximum extent provided by applicable law, and Legacy has paid all deposit insurance premiums and assessments required by applicable laws and regulations.

	(d) Corporate Power. Each of Legacy and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets; and Legacy has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Transaction, subject to receipt of all necessary approvals of Governmental Authorities and the approval of Legacy’s stockholders of this Agreement, and no other corporate proceedings are necessary on the part of Legacy to approve this Agreement or to consummate the Transaction.
	(e) Corporate Authority. Subject to the approval of this Agreement by the holders of not less than two-thirds of the outstanding shares of Legacy Common Stock (a “Required Vote”), this Agreement and the Transaction have been authorized by all necessary corporate action of Legacy and the Legacy Board on or prior to the date hereof. Legacy has duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Parent of this Agreement, this Agreement is a valid and legally binding obligation of Legacy, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, receivership, conservatorship, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles.
	(f) Regulatory Approvals; No Defaults.

	(i) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Legacy or any of its Subsidiaries in connection with the execution, delivery or performance by Legacy and The Legacy Trust Company of this Agreement and the Trust Company Merger Agreement or to consummate the Transaction except for (A) filings of applications or notices with, and approvals or waivers by, the OCC, the FDIC, the Department and the Federal Reserve Board, (B) filings with the SEC and state securities authorities, as applicable, in connection with the submission of this Agreement for the approval of the holders of Legacy Common Stock and the registration of Parent Common Stock issuable in the Merger, (C) the notification of the Merger to the Department and the filing with the Department and the Secretary of State of the Commonwealth of Pennsylvania of a certificate of approval of the Merger by the OCC, (D) the filing of Articles of Merger with the Secretary of State of the Commonwealth of Pennsylvania pursuant to the PBCL and the Articles of Combination with the OCC with respect to the Merger and (E) the approval and adoption of this Agreement by a Required Vote. As of the date hereof, Legacy is not aware of any reason why the approvals set forth above and referred to in Section 7.1(b) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 7.1(b).
	(ii) Subject to receipt, or the making, of the consents, approvals, waivers and filings referred to in the preceding paragraph and the expiration of related waiting periods, the execution, delivery and performance of this Agreement and the Trust Company Merger Agreement by Legacy and The

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Legacy Trust Company, respectively, and the consummation of the Transaction do not and will not (A) except as Previously Disclosed, constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Legacy or any of its Subsidiaries or to which Legacy or any of its Subsidiaries or any of their respective properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Legacy Articles, the Legacy Bylaws or similar governing documents of Legacy’s Subsidiaries or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.

	(g) Financial Reports; Undisclosed Liabilities.

	(i) Legacy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it subsequent to December 31, 2003 with the FDIC (collectively, Legacy’s “Securities Documents”), as of the date filed or to be filed and as amended prior to the date hereof, (A) complied or will comply in all material respects as to form with the applicable regulations of the FDIC and the SEC as the case may be and (B) did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date; and each of the consolidated statements of financial condition contained in any such Securities Documents, including the related notes and schedules thereto, fairly presents, or will fairly present, the consolidated financial position of Legacy and its Subsidiaries as of its date, and each of the consolidated statements of income, stockholders’ equity and cash flows or equivalent statements in Legacy’s Securities Documents, including any related notes and schedules thereto, fairly presents, or will fairly present, the consolidated results of operations, changes in stockholders’ equity and changes in cash flows, as the case may be, of Legacy and its Subsidiaries for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved, except in each case as may be noted therein.
	(ii) Since December 31, 2004, neither Legacy nor any of its Subsidiaries has incurred any liability other than in the ordinary course of business consistent with past practice, excluding the incurrence of expenses related to this Agreement and the Transaction.
	(iii) Since September 30, 2005, (A) Legacy and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice, excluding the incurrence of expenses related to this Agreement and the Transaction; (B) neither Legacy nor any of its Subsidiaries has taken nor permitted or entered into any contract with respect to, or otherwise agreed or committed to do or take, any of the actions set forth in Sections 4.1(d), (f), (g), (h), (j), (k) and (n) hereof between September 30, 2005 and the date hereof; (C) neither Legacy nor any of its Subsidiaries has taken or permitted or entered into any contract with respect to, or otherwise agreed or committed to do or take, any of the actions set forth in Sections 4.1(e), (i), (l), (m), (p), (q) and (r) between September 30, 2005 and the date hereof and (D) except as set forth in the Legacy Securities Documents, since September 30, 2005, no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events described in any paragraph of this Section 5.3 or otherwise, is reasonably likely to have a Material Adverse Effect with respect to Legacy.
	(iv) No agreement pursuant to which any loans or other assets have been or shall be sold by Legacy or its Subsidiaries entitled the buyer of such loans or other assets, unless there is material breach of a representation or covenant by Legacy or its Subsidiaries, to cause Legacy or its Subsidiaries to repurchase such loan or other asset or the buyer to pursue any other form of recourse against Legacy or its Subsidiaries. To the knowledge of Legacy, there has been no material breach of a representation or covenant by Legacy or its Subsidiaries in any such agreement. Except as

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	disclosed in Legacy’s Securities Documents filed prior to the date hereof, since December 31, 2002, no cash, stock or other dividend or any other distribution with respect to the capital stock of Legacy or any of its Subsidiaries has been declared, set aside or paid. Except as disclosed in Legacy’s Securities Documents filed prior to the date hereof, no shares of capital stock of Legacy have been purchased, redeemed or otherwise acquired, directly or indirectly, by Legacy since December 31, 2004, and no agreements have been made to do the foregoing.
	(v) Legacy maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning Legacy and its Subsidiaries is made known on a timely basis to the individuals responsible for the preparation of Legacy’s Securities Documents and other public disclosure documents. The President and the Chief Financial Officer of Legacy have signed, and Legacy has furnished to the FDIC, all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or 18 U.S.C. § 1350; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Legacy nor any of its officers has received notice from any Governmental Authorities questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.
	(vi) Except as reflected, noted or adequately reserved against in the consolidated financial statements of Legacy included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2005 as filed with the FDIC, at September 30, 2005 neither Legacy nor the Legacy Trust Company had any liabilities, whether accrued, absolute, contingent or otherwise, that are required to be reflected, noted or reserved against therein under GAAP or that are in any case or in the aggregate material.

	(h) Litigation. Except as set forth in Schedule 5.3(h) to the Legacy Disclosure Schedule, no litigation, claim or other proceeding before any court or governmental agency is pending against Legacy or any of its Subsidiaries and, to Legacy’s knowledge, no such litigation, claim or other proceeding has been threatened and there are no facts that could reasonably give rise to such litigation, claim or other proceeding. Neither Legacy nor any of its Subsidiaries is a party to any order, judgment or decree that has or could reasonably be expected to have a Material Adverse Effect with respect to Legacy.
	(i) Regulatory Matters.

	(i) Neither Legacy nor any of its Subsidiaries nor any of their respective properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, any Bank Regulatory Authority or any federal or state governmental agency or authority charged with the supervision or regulation of issuers of securities or the supervision or regulation of it (collectively, the “Legacy Regulatory Authorities”). Legacy and its Subsidiaries have paid all assessments made or imposed by any Legacy Regulatory Authority.
	(ii) Neither Legacy nor any of its Subsidiaries has been advised by, nor does it have any knowledge of facts that could give rise to an advisory notice by, any Legacy Regulatory Authority that such Legacy Regulatory Authority is contemplating issuing or requesting, or is considering the appropriateness of issuing or requesting, any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission.
	(iii) Legacy and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2002 with (A) the Federal Reserve Board, (B) the FDIC, (C) the Department, (D) any other state or federal regulatory authority, and (E) the SEC, and all other reports and statements required to be filed by them since January 1, 2002, and have paid all fees and assessments due and payable in connection therewith. Except as set forth in Schedule 5.3(i) of the Legacy Disclosure Schedule and except for normal examinations conducted by Bank Regulatory Authorities, (A) no Bank Regulatory Authority has initiated or has pending any proceeding or, to

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the knowledge of Legacy, investigation into the business or operations of Legacy or any of its Subsidiaries since January 1, 2002, except where such proceedings or investigation are not reasonably likely to have, either individually or in the aggregate, a Legacy Material Adverse Effect, and (B) there is no unresolved violation, criticism or exception by any Bank Regulatory Authority with respect to the business, operations, policies or procedures of Legacy or The Legacy Trust Company since January 1, 2002 that are reasonably likely to have, either individually or in the aggregate, a Legacy Material Adverse Effect.

	(j) Compliance With Laws. Each of Legacy and its Subsidiaries:

	(i) is in material compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation, Sections 23A and 23B of the Federal Reserve Act and FDIC, Department and OCC regulations pursuant thereto, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act and all other applicable fair lending laws and other laws relating to discriminatory business practices;
	(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit it to own or lease its properties and to conduct its business as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Legacy’s knowledge, no suspension or cancellation of any of them is threatened; and
	(iii) has received, since December 31, 2002, no notification or communication from any Governmental Authority (A) asserting that Legacy or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances that such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit or governmental authorization nor, to Legacy’s knowledge, do any grounds for any of the foregoing exist.

	(k) Material Contracts; Defaults.

	(i) Except for documents listed as exhibits to Legacy’s Securities Documents or as set forth in Schedule 5.3(k) of the Legacy Disclosure Schedule, neither Legacy nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding, whether written or oral, (A) with respect to the employment of any of its directors, officers, employees or consultants; (B) that would entitle any present or former director, officer, employee or agent of Legacy or any of its Subsidiaries to indemnification from Legacy or any of its Subsidiaries; (C) that is a material contract as defined in Item 601(b)(10) of Regulation S-K of the SEC; (D) that is a consulting agreement, including data processing, software programming and licensing contracts, not terminable on 60 days or less notice and involving the payment of more than $25,000 per annum or (E) that materially restricts the conduct of any business by Legacy or by any of its Subsidiaries (collectively, “Material Contracts”). Legacy has identified in Schedule 5.3(k) of the Legacy Disclosure Schedule and made available to Parent true, correct and complete copies of each such Material Contract.
	(ii) Neither Legacy nor any of its Subsidiaries is in material default under any contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its assets, business or operations may be bound or affected, or under which it or its respective assets, business or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as provided in this Agreement, no power of attorney or similar authorization given directly or indirectly by Legacy or any of its Subsidiaries is currently outstanding.

	(l) No Brokers. Except as set forth in Schedule 5.3(l) of the Legacy Disclosure Schedule, no action has been taken by Legacy or any of its Subsidiaries that would give rise to any valid claim against

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	any party hereto for a brokerage commission, finder’s fee or other like payment with respect to the Transaction.
	(m) Employee Benefit Plans.

	(i) All benefit and compensation plans, contracts, policies or arrangements covering current or former employees of Legacy and its Subsidiaries and current or former directors of Legacy and its Subsidiaries including, but not limited to, “employee benefit plans” within the meaning of Sections 3(1), 3(2), 3(3) and 3(37) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the “Benefit Plans”), have been set forth in Schedule 5.3(m) of the Legacy Disclosure Schedule. True and complete copies of the following have been provided or made available to Parent: (A) all Benefit Plans including, but not limited to, any trust instruments and insurance contracts forming a part of any Benefit Plans and all amendments thereto; (B) the most recent annual report (Form 5500), together with all schedules, as required, filed with the Internal Revenue Service (“IRS”) or Department of Labor (the “DOL”), as applicable, and any financial statements and opinions required by Section 103(e)(3) of ERISA with respect to each Benefit Plan; (C) for each Benefit Plan that is a “top-hat” plan, a copy of filings with the DOL; (D) the most recent determination letter issued by the IRS for each Benefit Plan that is intended to be “qualified” under Section 401(a) of the Code; (E) the most recent summary plan description and any summary of material modifications, as required, for each Benefit Plan; (F) the most recent actuarial report, if any, relating to each Benefit Plan; (G) the most recent actuarial valuation, study or estimate of any retiree medical and life insurance benefits plan or supplemental retirement benefits plan and (H) the most recent summary annual report for each Benefit Plan required to provide summary annual reports by Section 104 of ERISA.
	(ii) Each Benefit Plan has been administered to date in all material respects in accordance with the applicable provisions of ERISA, the Code and applicable law and with the terms and provisions of all documents, contracts or agreements pursuant to which such Benefit Plan is maintained. Each Benefit Plan that is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and that is intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the IRS or is the adoption of a prototype plan for which the prototype sponsor has a favorable determination letter from the IRS, and Legacy is not aware of any circumstances likely to result in revocation of any such favorable determination letter or the loss of the qualification of such Pension Plan under Section 401(a) of the Code. Neither Legacy nor any of its Subsidiaries has received any correspondence or written or verbal notice from the IRS, DOL, any other governmental agency, any participant in or beneficiary of, a Benefit Plan or any agent representing any of the foregoing that brings into question the qualification of any such Benefit Plan. There is no material pending or, to Legacy’s knowledge, threatened litigation relating to the Benefit Plans. Neither Legacy nor any of its Subsidiaries has engaged in a transaction with respect to any Benefit Plan or Pension Plan that, assuming the taxable period of such transaction expired as of the date hereof, could subject Legacy or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA. There are no matters pending before the IRS, DOL or other governmental agency with respect to any Benefit Plans, nor does Legacy have knowledge that any is threatened.
	(iii) No liability under Subtitle C or D of Title IV of ERISA has been or to Legacy’s knowledge is presently expected to be incurred by Legacy or any of its Subsidiaries with respect to any ongoing, frozen or terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them or the single-employer plan of any entity that is considered one employer with Legacy under Section 4001 of ERISA or Section 414 of the Code (an “ERISA Affiliate”). Neither Legacy nor any of its Subsidiaries has incurred, and neither expects to incur, to Legacy’s knowledge, any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA, regardless of whether based on contributions of an ERISA Affiliate. No notice of a “reportable event,” within the

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	meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate.
	(iv) All contributions required to be made under the terms of any Benefit Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an “accumulated funding deficiency”, whether or not waived, within the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding funding waiver. Except as set forth in Schedule 5.3(m) of the Legacy Disclosure Schedule, neither Legacy nor any of its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
	(v) Except as set forth in Schedule 5.3(m) of the Legacy Disclosure Schedule, neither Legacy nor any of its Subsidiaries has any obligations for retiree health and life benefits under any Benefit Plan, other than coverage as may be required under Section 4980B of the Code or Part 6 of Title I of ERISA, or under the continuation of coverage provisions of the laws of any state or locality. No event or condition exists with respect to a Benefit Plan that could subject Legacy to tax under Section 4980B of the Code.
	(vi) Except as set forth in Schedule 5.3(m) of the Legacy Disclosure Schedule, none of the execution of this Agreement, stockholder approval of this Agreement or consummation of the Transaction will, except as set forth in Schedule 5.3(m) of the Legacy Disclosure Schedule, (A) entitle any employees of Legacy or any of its Subsidiaries to severance pay or any increase in severance pay upon any termination of employment after the date hereof, (B) accelerate the time of payment or vesting or trigger any payment or funding, through a grantor trust or otherwise, of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Benefit Plans, (C) result in any breach or violation of, or a default under, any of the Benefit Plans or (D) result in any payment that would be a “parachute payment” to a “disqualified individual” as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future.
	(vii) All required reports and descriptions, including but not limited to Form 5500 annual reports and required attachments, Forms 1099-R, summary annual reports, Forms PBGC-1 and summary plan descriptions, have been filed or distributed appropriately with respect to each Benefit Plan. All required tax filings with respect to each Benefit Plan have been made, and any taxes due in connection with such filings have been paid.

	(n) Labor Matters. Neither Legacy nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is Legacy or any of its Subsidiaries the subject of a proceeding asserting that it has committed an unfair labor practice within the meaning of the National Labor Relations Act or seeking to compel Legacy or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to Legacy’s knowledge, threatened, nor is Legacy or any of its Subsidiaries aware of any activity involving its employees seeking to certify a collective bargaining unit or engaging in other organizational activity.
	(o) Environmental Matters.

(i) Except as Previously Disclosed or as set forth in Schedule 5.3(o) of the Legacy Disclosure Schedule, to Legacy’s Knowledge, (A) Legacy and its Subsidiaries are in material compliance with applicable environmental laws; (B) no real property, including buildings or other structures, currently or formerly owned or operated by Legacy or any of its Subsidiaries, or any property in which Legacy or any of its Subsidiaries has held a security interest, Lien or a fiduciary or management role (“Legacy Loan Property”), has been contaminated with, or has had any release of, any Hazardous Substance except in material compliance with Environmental Laws; (C) neither

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	Legacy nor any of its Subsidiaries could be deemed the owner or operator of, or have actively participated in the management regarding Hazardous Substances of, any Legacy Loan Property that has been contaminated with, or has had any material and unlawful release to the environment of, any regulated quantity of any Hazardous Substance; (D) neither Legacy nor any of its Subsidiaries has any material liability for any Hazardous Substance disposal or contamination on any third party property; (E) neither Legacy nor any of its Subsidiaries has received any notice, demand letter, claim or request for information alleging any material violation of, or liability under, any Environmental Law; (F) neither Legacy nor any of its Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Authority or any third party relating to any Environmental Law; (G) there are no circumstances or conditions (including the presence of unencapsulated friable asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior manufacturing operations, dry-cleaning or automotive services) involving Legacy or any of its Subsidiaries, any currently or formerly owned or operated property, or any Legacy Loan Property, that could reasonably be expected to result in any material claims, liability or investigations against Legacy or any of its Subsidiaries, result in any material restrictions on the ownership, use or transfer of any property pursuant to any Environmental Law or materially and adversely affect the value of any Legacy Loan Property, (H) Legacy has set forth in Schedule 5.3(o) of the Legacy Disclosure Schedule and made available to Parent copies of all environmental reports or studies, sampling data, correspondence and filings in its possession or reasonably available to it relating to Legacy, its Subsidiaries and any currently owned or operated property of Legacy which were prepared in the last five years and (I) Legacy has made available to Parent copies of all environmental reports or studies, sampling data, correspondence and filings in the possession or reasonably available to it relating to any currently outstanding Legacy Loan and which were prepared for Legacy in the last five years.
	(ii) As used herein, (A) the term “Environmental Laws” means any federal, state or local law, regulation, order, decree or permit relating to: (1) the protection or restoration of the environment, human health, safety or natural resources in regard to any Hazardous Substance; (2) the handling, use, presence, disposal, release or threatened release to the environment of any Hazardous Substance or (3) material effects of any Hazardous Substance on any legally delineated wetlands, indoor air spaces; (4) any material physical damage injury or any injury or threat of injury to persons or property in connection with any Hazardous Substance; and (B) the term “Hazardous Substance” means any regulated quantity of any substance other than at concentrations and in locations that are naturally occurring that are: (1) listed, classified or regulated pursuant to any Environmental Law; (2) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon or (3) any other substance that is the subject of regulatory action by any Governmental Authority in connection with any Environmental Law and (C) the term “Legacy’s Knowledge” means the actual knowledge, immediately prior to the Effective Time and Effective Date, of any officer or director of Legacy or of Legacy’s Manager of Environmental Health and Safety.

	(p) Tax Matters.

(i) (A) All Tax Returns that are required to be filed on or before the Effective Date (taking into account any extensions of time within which to file that have not expired) by or with respect to the Legacy Group, including Legacy and its Subsidiaries, have been or will be timely filed on or before the Effective Date; (B) all such Tax Returns are or will be true and complete in all material respects; (C) all Taxes due of the Legacy Group, including Legacy and its Subsidiaries, whether or not shown on the Tax Returns referred to in clause (A) have been or will be timely paid in full; (D) the Tax Returns referred to in clause (A) have not been examined by the IRS or the appropriate Tax authority and the Legacy Group has not extended the statute of limitations for any such Tax Returns; (E) all deficiencies asserted or assessments made as a result of examinations conducted by any taxing authority have been paid in full; (F) no issues that have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns referred to in

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	clause (A) are currently pending and (G) no member of the Legacy Group has extended any statutes of limitation with respect to any Taxes of Legacy.
	(ii) Legacy has made available to Parent true and correct copies of the United States federal income Tax Returns filed by Legacy for each of the three most recent fiscal years for which such returns have been filed.
	(iii) Neither Legacy nor any of its Subsidiaries has any liability with respect to income, franchise or similar Taxes that accrued on or before the end of the most recent period covered by Legacy’s Securities Documents filed prior to the date hereof in excess of the amounts accrued or subject to a reserve with respect thereto that are reflected in the financial statements included in Legacy’s Securities Documents filed on or prior to the date hereof.
	(iv) Neither Legacy nor any of its Subsidiaries is a party to any Tax allocation or sharing agreement (other than an agreement exclusively between Legacy and a Legacy Subsidiary), is or has been a member of an affiliated group filing consolidated or combined Tax Returns other than a group the common parent of which is or was Legacy or otherwise has any liability for the Taxes of any Person other than a member of the Legacy Group.
	(v) No closing agreements, private letter rulings, technical advice memoranda or similar agreements or rulings have been entered into or issued by any taxing authority with respect to Legacy and its Subsidiaries.
	(vi) Neither Legacy nor any of its Subsidiaries maintains any compensation plans, programs or arrangements the payments under which would not be deductible as a result of the limitations under Section 162(m) or Section 280G of the Code and the regulations issued thereunder, nor would result in the imposition of an excise tax under Section 409A or 4999 of the Code.
	(vii) As of the date hereof, Legacy has no reason to believe that any conditions exist that might prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
	(viii) (A) No Tax is required to be withheld pursuant to Section 1445 of the Code as a result of the Transaction and (B) all Taxes that Legacy or any of its Subsidiaries is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required by applicable law, have been paid to the proper Governmental Authority or other Person.
	(ix) There are no Liens for Taxes on any of the assets of Legacy or any of its Subsidiaries, except for Liens for Taxes not yet due and payable.
	(x) Neither Legacy nor any of its Subsidiaries (A) has agreed, or is required, to make any adjustment under Section 481(a) of the Code or any comparable provision of state, local or foreign law or has any knowledge that a Governmental Authority has proposed any such adjustment or change in accounting method with respect to Legacy or its Subsidiaries or (B) has any application pending with any Governmental Authority requesting permission for any change in accounting method.
	(xi) Neither Legacy nor any of its Subsidiaries is a successor for Tax purposes to any Person by way of merger, reorganization or similar transaction other than Northern State Bank.
	(xii) No claim has ever been made by a Governmental Authority in a jurisdiction where Legacy or any of its Subsidiaries does not file Tax Returns that Legacy or such Subsidiaries is or may be subject to taxation by that jurisdiction.
	(xiii) Neither Legacy nor any of its Subsidiaries has been the “distributing corporation” within the meaning of Section 355(c)(2) of the Code or has been the subject of a distribution with respect to a transaction described in Section 355 of the Code within the five-year period ending as of the date of this Agreement.

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	(xiv) Neither Legacy nor any of its Subsidiaries has participated in any “reportable transaction” or “listed transaction” that is required to be reported pursuant to Section 1.6011-4 of the Treasury Regulations.
	(xv) To the Knowledge of the Legacy and its Subsidiaries, no audit of any Tax Return of Legacy or any of its Subsidiaries is threatened.
	(xvi) Neither Legacy nor any of its Subsidiaries is a party to any agreement providing for the allocation, indemnification or sharing of Taxes other than any agreement among members of an affiliated group that includes Legacy as the common parent.
	(xvii) Neither Legacy nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

	(A) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date;
	(B) intercompany transaction or excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income tax law);
	(C) installment sale or open transaction disposition made on or prior to the Closing Date; or
	(D) prepaid amount received on or prior to the Closing Date.

	(xviii) Schedule 5.3(p) of the Legacy Disclosure Schedule lists all federal, state, local and foreign income and franchise Tax Returns filed with respect to Legacy or any of its Subsidiaries for the three-year period ending on (and including) the Closing Date and lists all Tax Returns that currently are the subject of audit by any Tax Authority or for which a deficiency has been asserted or assessed.
	(xix) Neither Legacy nor any of its Subsidiaries is a party in any joint venture, partnership or other arrangement or contract that could be treated as a partnership for federal income tax purposes.
	(xx) Neither Legacy nor any of its Subsidiaries has any liability for the Taxes of any Person other than Legacy and its Subsidiaries (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), (B) as a transferee or successor (other than as successor by merger to Northern State Bank), (C) by contract or (iv) otherwise.
	(xxi) Legacy and its Subsidiaries are in compliance in all material respects with all state and federal laws, rules and regulations related to the escheat, or other similar laws, rules and regulations, of monies and other properties held by any of them.

	(q) Risk Management Instruments. Neither Legacy nor any of its Subsidiaries is a party or has agreed to enter into an exchange traded or over-the-counter equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is not included on Legacy’s consolidated statement of financial condition and is a derivatives contract (including various combinations thereof) (each, a “Derivatives Contract”) nor does Legacy or any of its Subsidiaries own securities that (i) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (ii) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes.
	(r) Loans; Nonperforming and Classified Assets.

	(i) Except as set forth in Schedule 5.3(r) of the Legacy Disclosure Schedule, each Loan on the books and records of Legacy and its Subsidiaries was made and has been serviced in all material

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	respects in accordance with their customary lending standards in the ordinary course of business, is evidenced in all material respects by appropriate and sufficient documentation and, to the knowledge of Legacy, constitutes the legal, valid and binding obligation of the obligor named therein, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditor’s rights or by general equity principles.
	(ii) Legacy has set forth in Schedule 5.3(r) of the Legacy Disclosure Schedule as to Legacy and each Legacy Subsidiary as of the latest practicable date prior to the date of this Agreement: (A) any written or, to Legacy’s knowledge, oral Loan under the terms of which the obligor is 90 or more days delinquent in payment of principal or interest, or to Legacy’s knowledge, in default of any other material provision thereof; (B) each Loan that has been classified as “substandard,” “doubtful,” “loss” or “special mention” or words of similar import by Legacy, a Legacy Subsidiary or an applicable regulatory authority; (C) a listing of the OREO acquired by foreclosure or by deed-in-lieu thereof, including the book value thereof and (D) each Loan with any director, executive officer or five percent or greater stockholder of Legacy or a Legacy Subsidiary, or to the knowledge of Legacy, any Person controlling, controlled by or under common control with any of the foregoing.

	(s) Properties. All real and personal property owned by Legacy or a Subsidiary of Legacy or presently used by any of them in their respective business is in an adequate condition, ordinary wear and tear excepted, and is sufficient to carry on its business in the ordinary course of business consistent with its past practices. Legacy has good and marketable fee simple title free and clear of all Liens to all of the material properties and assets, real and personal, other than properties sold by Legacy in the ordinary course of business, except (i) Liens for current taxes and assessments not yet due or payable, (ii) pledges to secure deposits and other Liens incurred in the ordinary course of its banking business and (iii) such imperfections of title, easements and encumbrances, if any, as are not material in character, amount or extent. Except as set forth in Schedule 5.3(s) of the Legacy Disclosure Schedule, all real and personal property that is material to Legacy’s business on a consolidated basis and leased or licensed by Legacy or a Subsidiary of Legacy is held pursuant to leases or licenses that are valid and enforceable in accordance with their respective terms and such leases will not terminate or lapse prior to the Effective Time.
	(t) Intellectual Property. Except as set forth in Schedule 5.3(t) of the Legacy Disclosure Schedule, Legacy and each Subsidiary of Legacy owns or possesses valid and binding licenses and other rights to use without payment of any material amount all material patents, copyrights, trade secrets, trade names, service marks and trademarks used in its businesses, all of which have been Previously Disclosed by Legacy, and none of Legacy or any of its Subsidiaries has received any notice of conflict with respect thereto that asserts the right of others. Legacy and each of its Subsidiaries have performed in all material respects all the obligations required to be performed by them and are not in default under any contract, agreement, arrangement or commitment relating to any of the foregoing. Schedule 5.3(t) to the Legacy Disclosure Schedule sets forth a description of all intellectual property rights of Legacy and each Subsidiary of Legacy, including, without limitation, patents, trademarks, copyrights, service marks and all licenses relating thereto.
	(u) Fiduciary Accounts. Legacy and each of its Subsidiaries has properly administered all accounts for which it acts as a fiduciary, including but not limited to accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable laws and regulations. Neither Legacy nor any of its Subsidiaries, nor any of their respective directors, officers or employees, has committed any breach of trust to Legacy’s knowledge with respect to any fiduciary account and the records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.
	(v) Books and Records. The books and records of Legacy and its Subsidiaries have been fully, properly and accurately maintained in material compliance with applicable legal and accounting

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	requirements, and such books and records accurately reflect in all material respects all dealings and transactions in respect of the business, assets, liabilities and affairs of Legacy and its Subsidiaries.
	(w) Insurance. Legacy has set forth in Schedule 5.3(w) of the Legacy Disclosure Schedule a description of all of the material insurance policies, binders or bonds currently maintained by Legacy and its Subsidiaries (“Insurance Policies”). Legacy and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Legacy reasonably has determined to be prudent in accordance with industry practices. All the Insurance Policies are in full force and effect; Legacy and its Subsidiaries are not in material default thereunder and all claims thereunder have been filed in due and timely fashion.
	(x) Allowance For Loan Losses. Legacy’s allowance for loan losses is sufficient at the date of this Agreement for its reasonably anticipated loan losses, is in compliance with the standards established by applicable Governmental Authorities and GAAP and, to the knowledge of Legacy, is adequate.
	(y) Required Vote. The affirmative vote of the holders of two-thirds of the outstanding shares of Legacy Common Stock is necessary to approve this Agreement and the Merger on behalf of Legacy. No other vote of the stockholders of Legacy is required by law, the Legacy Articles, the Legacy Bylaws or otherwise to approve this Agreement and the Merger.
	(z) Fairness Opinion. The Legacy Board has received an opinion of Griffin Financial Group LLP (“Griffin”) to the effect that as of the date hereof the Merger Consideration is fair to the holders of Legacy Common Stock from a financial point of view. The total fees and expenses payable to Griffin assuming consummation of the Merger will not exceed $850,000.
	(aa) Absence of Certain Changes or Events.

	(i) Except as publicly disclosed in the Legacy Securities Documents filed prior to the date of this Agreement, since September 30, 2005, no event or events have occurred that have had or are reasonably likely to have, either individually or in the aggregate, a Legacy Material Adverse Effect.
	(ii) Except as publicly disclosed in the Legacy Securities Documents filed prior to the date of this Agreement, Legacy and its Subsidiaries have carried on their respective business in all material respects in the ordinary course.

	(bb) State Takeover Laws. The Board of Directors of Legacy has approved this Agreement and the Transaction contemplated hereby as required to render inapplicable to such Agreement and the Transaction any statutory anti-takeover provisions applicable to Legacy.
	(cc) Disclosure. The representations and warranties contained in this Section 5.3, when considered as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 5.3 not misleading.

	(a) Organization, Standing and Authority. Parent is duly organized, validly existing and in good standing under the laws of the State of Florida. Parent is duly qualified to do business and is in good standing in each jurisdiction where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect on Parent. Parent has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted.
	(b) Parent Stock.

	(i) As of the date hereof, the authorized capital stock of Parent consists solely of 500,000,000 shares of Parent Common Stock, of which 57,321,962 shares were issued and outstanding as of October 31, 2005, and 20,000,000 shares of Parent Preferred Stock, of which no

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	shares were issued and outstanding as of the date hereof. The outstanding shares of Parent Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, and none of the shares of Parent Common Stock have been issued in violation of the preemptive rights of any Person. As of the date hereof, there are no Rights authorized, issued or outstanding with respect to the capital stock of Parent, except for shares of Parent Common Stock issuable pursuant to the Parent Benefits Plans and by virtue of this Agreement.
	(ii) The shares of Parent Common Stock to be issued in exchange for shares of Legacy Common Stock in the Merger, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable and the issuance thereof is not subject to any preemptive right.

	(c) Subsidiaries.

	(i) Each of Parent’s Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, and is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect on Parent. Parent Bank is duly licensed by the OCC and its deposits are insured by the Bank Insurance Fund in the manner and to the maximum extent provided by law.
	(ii) As of the date hereof, (A) except as set forth in Schedule 5.4(c) of Parent’s Disclosure Schedule, Parent owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries; (B) no equity securities of any of Parent’s Subsidiaries are or may become required to be issued other than to Parent by reason of any Right or otherwise; (C) there are no contracts, commitments, understandings or arrangements by which Parent’s Subsidiaries are or may be bound to sell or otherwise transfer any of its equity securities other than to Parent or any of its wholly owned Subsidiaries and (D) there are no contracts, commitments, understandings or arrangements relating to Parent’s right to vote or to dispose of such securities.

	(d) Corporate Power. Each of Parent and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets. Parent and Parent Bank have the respective corporate power and authority to execute, deliver and perform their respective obligations under this Agreement and to consummate the Transaction, subject to the receipt of all necessary approvals of Governmental Authorities, and no other corporate proceedings are necessary on the part of Parent or Parent Bank to approve this Agreement or for the consummation of the Transaction.
	(e) Corporate Authority. This Agreement and the Transaction have been authorized by all necessary corporate action of Parent, the Parent Board, Parent Bank and Parent Bank Board. This Agreement has been duly executed and delivered by Parent and Parent Bank and, assuming due authorization, execution and delivery by Legacy, this Agreement is a valid and legally binding agreement of Parent enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles.
	(f) Regulatory Approvals; No Defaults.

(i) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Parent or any of its Subsidiaries in connection with the execution, delivery or performance by Parent, Parent Bank and Parent Trust Company of this Agreement and the Trust Company Merger Agreement or to consummate the Transaction, except as Previously Disclosed, and except for (A) filings of applications or notices with and approvals or waivers by the Federal Reserve Board, the OCC and the Department; (B) filings with the SEC and state securities authorities, as applicable, in connection with the registration of Parent Common Stock issuable in the Merger; (C) the approval of the listing on the NYSE of the Parent Common Stock to be issued in the Merger and (D) the filing of Articles of Merger with the Secretary of State of the Commonwealth of Pennsylvania

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	pursuant to the PBCL and the filing of Articles of Combination with the OCC pursuant to the National Banking Act with respect to the Merger. As of the date hereof, Parent is not aware of any reason why the approvals set forth above and referred to in Section 7.1(b) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 7.1(b).
	(ii) Subject to receipt, or the making, of the consents, approvals, waivers and filings referred to in the preceding paragraph and expiration of the related waiting periods, the execution, delivery and performance of this Agreement and the Trust Company Merger Agreement by Parent, Parent Bank and Parent Trust Company and the consummation of the Transaction do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Parent or of any of its Subsidiaries or to which Parent or any of its Subsidiaries or properties is subject or bound, (B) constitute a breach or violation of, or a default under, the articles of incorporation or bylaws or similar governing documents of Parent or any of its Subsidiaries or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.

	(g) Financial Reports and Securities Documents; Material Adverse Effect.

	(i) Parent’s Annual Report on Form 10-K for the years ended December 31, 2004, 2003 and 2002 and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it subsequent to December 31, 2002 under the Securities Act, or under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act in the form filed or to be filed (collectively, Parent’s “Securities Documents”) with the SEC, as of the date filed or to be filed, (A) complied or will comply in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be and (B) did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date. Each of the consolidated statements of financial condition contained in or incorporated by reference into any such Securities Document, including the related notes and schedules thereto, fairly presents, or will fairly present, the consolidated financial position of Parent and its Subsidiaries as of its date, and each of the consolidated statements of operations, stockholders’ equity and comprehensive income and cash flows or equivalent statements in such Securities Documents, including any related notes and schedules thereto, fairly presents, or will fairly present, the consolidated results of operations, changes in stockholders’ equity and cash flows, as the case may be, of Parent and its Subsidiaries for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved, except in each case as may be noted therein.
	(ii) Except as described in Schedule 5.4(g) of the Parent Disclosure Schedule, since December 31, 2004, neither Parent nor any of its Subsidiaries has incurred any liability other than in the ordinary course of business consistent with past practice, excluding the incurrence of expenses related to this Agreement and the Transaction.
	(iii) Since December 31, 2004, (A) Parent and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice, excluding the incurrence of expenses related to this Agreement and the Transaction; (B) except as Previously Disclosed, neither Parent nor any of its Subsidiaries has taken nor permitted any of the actions set forth in Section 4.2 between December 31, 2004 and the date hereof and (C) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events described in any paragraph of this Section 5.4 or otherwise, is reasonably likely to have a Material Adverse Effect with respect to Parent.

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	(iv) Parent maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning Parent and its Subsidiaries is made known on a timely basis to the individuals responsible for the preparation of Parent’s Securities Documents and other public disclosure documents. The Chief Executive Officer and the Chief Financial Officer of Parent have signed, and Parent has furnished to the SEC, all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or 18 U.S.C. § 1350; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Parent nor any of its officers has received notice from any Governmental Authorities questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.
	(v) Except as reflected, noted or adequately reserved against in the consolidated financial statements of Parent included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2005 as filed with the SEC, at September 30, 2005 neither Parent nor any Parent Subsidiary had any liabilities, whether accrued, absolute, contingent or otherwise, that are required to be reflected, noted or reserved against therein under GAAP or that are in any case or in the aggregate material.

	(h) Litigation. No litigation, claim or other proceeding before any court or governmental agency is pending against Parent or its Subsidiaries that could reasonably be expected to have a Material Adverse Effect with respect to Parent and, to Parent’s knowledge, no such litigation, claim or other proceeding has been threatened and there are no facts that could reasonably give rise to such litigation, claim or other proceeding. Neither Parent nor any of its Subsidiaries is a party to any order, judgment or decree that has or could reasonably be expected to have a Material Adverse Effect with respect to Parent.
	(i) Regulatory Matters.

	(i) Neither Parent nor any of its Subsidiaries nor any of any of their respective properties is a party to or is subject to any order or decree, agreement, memorandum of understanding or similar arrangement with, or commitment letter or similar submission to, or extraordinary supervisory letter from, any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions or issuers of securities or engaged in the insurance of deposits or the supervision or regulation of it. Parent and its Subsidiaries have paid all assessments made or imposed by any Parent Regulatory Authority.
	(ii) Neither Parent nor any its Subsidiaries has been advised by, and does not have any knowledge of facts that could give rise to an advisory notice by, any Parent Regulatory Authority that such Parent Regulatory Authority is contemplating issuing or requesting, or is considering the appropriateness of issuing or requesting, any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission.
	(iii) Parent and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2002 with (A) the Federal Reserve Board, (B) the FDIC, (C) the OCC, (D) any state regulatory authority and (E) the SEC, and all other reports and statements required to be filed by them since January 1, 2002, and have paid all fees and assessments due and payable in connection therewith. Except as set forth in Schedule 5.4(i) of Parent Disclosure Schedule and except for normal examinations conducted by Bank Regulatory Authorities, (A) no Bank Regulatory Authority has initiated or has pending any proceeding or, to the knowledge of Parent, investigation into the business or operations of Parent or any of its Subsidiaries since January 1, 2002, except where such proceedings or investigation are not reasonably likely to have, either individually or in the aggregate, a Parent Material Adverse Effect and (B) there is no unresolved violation, criticism or exception by any Bank Regulatory Authority with respect to the business, operations, policies or procedures of Parent or Parent Bank since January 1, 2002 that are reasonably likely to have, either individually or in the aggregate, a Parent Material Adverse Effect.

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	(j) Compliance With Laws. Except for matters that could not reasonably be expected to have a Material Adverse Effect with respect to Parent and its Subsidiaries, each of Parent and its Subsidiaries:

	(i) is in material compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including without limitation Sections 23A and 23B of the Federal Reserve Act and OCC regulations pursuant thereto, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act and all other applicable fair lending laws and other laws relating to discriminatory business practices;
	(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Parent’s knowledge, no suspension or cancellation of any of them is threatened; and
	(iii) has received, since December 31, 2002, no notification or communication from any Governmental Authority (A) asserting that Parent or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit or governmental authorization nor, to Parent’s knowledge, do any grounds for any of the foregoing exist.

	(k) No Brokers. No action has been taken by Parent or its Subsidiaries that would give rise to any valid claim against any party hereto for a brokerage commission, finder’s fee or other like payment with respect to the Transaction, except a fee to be paid to Keefe, Bruyette & Woods, Inc.
	(l) Tax Matters. As of the date hereof, Parent does not have any reason to believe that any conditions exist that might prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
	(m) Risk Management Instruments. Neither Parent nor any of its Subsidiaries is a party or has agreed to enter into any Derivatives Contract that is not included on Parent’s consolidated statement of financial condition nor does Parent or any of its Subsidiaries own securities that (i) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (ii) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes.
	(n) Ownership of Legacy Common Stock. Except as set forth on Schedule 5.4(n) of the Parent Disclosure Schedule, none of Parent or any of its Subsidiaries, or to Parent’s knowledge, any of its other affiliates or associates as such terms are defined under the Exchange Act, owns beneficially or of record, directly or indirectly, or is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of Legacy Common Stock other than shares held in a fiduciary capacity that are beneficially owned by third parties or as a result of debts previously contracted.
	(o) Disclosure. The representations and warranties contained in this Section 5.4, when considered as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 5.4 not misleading.
	(p) Absence of Certain Changes or Events.

	(i) Except as publicly disclosed in the Parent Securities Documents filed prior to the date of this Agreement, since September 30, 2005, no event or events have occurred that have had or are reasonably likely to have, either individually or in the aggregate, a Parent Material Adverse Effect.

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	(ii) Except as publicly disclosed in the Parent Securities Documents filed prior to the date of this Agreement, Parent and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary course.

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	(i) The term “Acquisition Proposal” means any inquiry, proposal or offer, filing of any regulatory application or notice, whether in draft or final form, or disclosure of an intention to do any of the foregoing from any person relating to any (w) direct or indirect acquisition or purchase of a business that constitutes a substantial portion of the net revenues, net income or net assets of Legacy or any of its Subsidiaries, (x) direct or indirect acquisition or purchase of Legacy Common Stock after the date of this Agreement by a Person who on the date of this Agreement does not own 10% or more of Legacy’s Common Stock and such Person by reason of such purchase or acquisition first becomes the owner of 10% or more of Legacy’s Common Stock after the date of this Agreement or the direct or indirect acquisition or purchase of 5% or more of Legacy’s Common Stock after the date of this Agreement by a Person who on the date of this Agreement owns 10% or more of Legacy’s Common Stock, (y) tender offer or exchange offer that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of Legacy or (z) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Legacy other than the transactions contemplated by this Agreement.
	(ii) The term “Superior Proposal” means any bona fide, unsolicited written Acquisition Proposal made by a Third Party to acquire more than 50% of the combined voting power of the shares of Legacy Common Stock then outstanding or all or substantially all of Legacy’s consolidated assets for consideration consisting of cash and/or securities that is on terms that the Board of Directors of Legacy in good faith concludes, after consultation with its financial advisors and outside counsel, taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and the person making the proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation, (A) is on terms that the Board of Directors of Legacy in its good faith judgment believes to be more favorable from a financial point of view to its stockholders than the Merger; (B) for which financing, to the extent required, is then fully committed or reasonably determined to be available by the Board of Directors of Legacy and (C) is reasonably capable of being completed.

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	(i) the termination of this Agreement by Parent pursuant to Section 8.1(f);
	(ii) the termination of this Agreement by Legacy pursuant to Section 8.1(g);
	(iii) the termination of this Agreement pursuant to any other Section following the commencement of a tender offer or exchange offer for 25% or more of the outstanding common stock of Legacy and Legacy shall not have sent to its stockholders, within 10 business days after the commencement of such tender offer or exchange offer, a statement that the Legacy Board recommends rejection of such tender offer or exchange offer; or
	(iv) the occurrence of any of the following events within eighteen months of the termination of this Agreement pursuant to Section 8.1(e), provided that an Acquisition Proposal shall have been made by a Third Party after the date hereof and prior to such termination that shall not have been withdrawn in good faith prior to such termination: (A) Legacy enters into an agreement to merge with or into, or be acquired, directly or indirectly, by merger or otherwise by, such Third Party; (B) such Third Party, directly or indirectly, acquires substantially all of the total assets of Legacy and its Subsidiaries, taken as a whole; or (C) such Third Party, directly or indirectly, acquires more than 50% of the outstanding Legacy Common Stock. As used herein, “Third Party” means any person as defined in Section 13(d) of the Exchange Act other than Parent or its Affiliates.

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	(a) Stockholder Approval. This Agreement and the Merger shall have been duly approved by the requisite vote of the holders of outstanding shares of Legacy Common Stock.
	(b) Regulatory Approvals. All regulatory approvals required to consummate the Merger shall have been obtained, including the receipt of any necessary regulatory approval to operate the main and branch offices of Legacy as offices of the Surviving Bank, and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain any conditions, restrictions or requirements that the Parent Board reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the Transaction to such a degree that Parent would not have entered into this Agreement had such conditions, restrictions or requirements been known at the date hereof.
	(c) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order, whether temporary, preliminary or permanent, that is in effect and prohibits consummation of the Transaction.
	(d) Registration Statement. The Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated by the SEC and not withdrawn.
	(e) Listing. The shares of Parent Common Stock to be issued in the Merger shall have been approved for listing on the NYSE.

	(a) Representations and Warranties. The representations and warranties of Parent set forth in this Agreement, subject in all cases to the standard set forth in Section 5.2, shall be true and correct as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date, except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date, and Legacy shall have received a certificate, dated the Effective Date, signed on behalf of Parent by the Chief Executive Officer and the Chief Financial Officer of Parent to such effect.
	(b) Performance of Obligations of Parent. Parent shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time in order to consummate the Merger, and Legacy shall have received a certificate, dated the Effective Date, signed on behalf of Parent by the Chief Executive Officer and the Chief Financial Officer of Parent to such effect.
	(c) Tax Opinion. Legacy shall have received the written opinion of Stevens & Lee, dated as of the Effective Date, which shall be based on such written representations from Parent, Legacy and others as such counsel shall reasonably request, to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code.
	(d) Other Actions. Parent shall have furnished Legacy with such certificates of its respective officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 7.1 and 7.2 as Legacy may reasonably request.

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	(a) Representations and Warranties. The representations and warranties of Legacy set forth in this Agreement, subject in all cases to the standard set forth in Section 5.2, shall be true and correct as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date, except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date, and Parent shall have received a certificate, dated the Effective Date, signed on behalf of Legacy by the Chairman and Chief Executive Officer and the Chief Financial Officer of Legacy to such effect.
	(b) Performance of Obligations of Legacy. Legacy shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time in order to consummate the Merger, and Parent shall have received a certificate, dated the Effective Date, signed on behalf of Legacy by the Chairman and Chief Executive Officer and the Chief Financial Officer of Legacy to such effect.
	(c) Tax Opinion. Parent shall have received the written opinion of Duane Morris LLP, dated as of the Effective Date, which shall be based on such written representations from Parent, Legacy and others as such counsel shall reasonably request, to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code.
	(d) Environmental Reports. Legacy shall have furnished Parent with a Phase I environmental study with respect to all real property owned by Legacy or any of its Subsidiaries (which Phase I environmental studies shall be at the sole cost and expense of Parent), the findings of which studies shall be commercially acceptable to Parent who shall not unreasonably withhold such acceptance.
	(e) Other Actions. Legacy shall have furnished Parent with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 7.1 and 7.3 as Parent may reasonably request.

	(a) Mutual Consent. By the mutual consent in writing of Parent and Legacy if the Board of Directors of each so determines by vote of a majority of the members of its entire Board.
	(b) Breach. Provided that the terminating party is not then in material breach of any representation, warranty, covenant or agreement contained therein, subject in all cases to the standard set forth in Section 5.2, by Parent or Legacy, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event of: (i) a breach by Parent, on the one hand, or Legacy, on the other hand, as the case may be, of any representation or warranty contained herein, subject to the standard set forth in Section 5.2, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party or parties of such breach; or (ii) a breach by Parent, on the one hand, or Legacy, on the other hand, as the case may be, of any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party or parties of such breach, which breach, whether under (i) or (ii), would be reasonably expected, individually or in the aggregate with other breaches, to result in a Material Adverse Effect with respect to Parent or Legacy, as the case may be.
	(c) Delay. By Parent or Legacy, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event that the Merger is not consummated by September 30, 2006,

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	except to the extent that the failure of the Merger then to be consummated by such date shall be due to the failure of the party seeking to terminate pursuant to this Section 8.1(c) to perform or observe the covenants and agreements of such party set forth in this Agreement.
	(d) No Regulatory Approval. By Parent or Legacy, if its Board of Directors so determines by a vote of a majority of the members of its entire Board, in the event the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied by final nonappealable action of such Governmental Authority or an application therefor shall have been permanently withdrawn at the request of a Governmental Authority, provided, however, that no party shall have the right to terminate this Agreement pursuant to this Section 8.1(d) if such denial shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants of such party set forth herein.
	(e) No Legacy Stockholder Approval. By Parent, or by Legacy provided that Legacy shall not be in material breach of any of its obligations under Section 6.2, if any approval of the stockholders of Legacy contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the required vote at the Legacy Meeting or at any adjournment or postponement thereof.
	(f) Legacy Failure to Recommend. At any time prior to the Legacy Meeting, by Parent if (i) Legacy shall have breached Section 6.8 in any respect materially adverse to Parent, (ii) the Legacy Board shall have failed to make its Approval Recommendation or shall have effected a Change in Legacy Recommendation, (iii) the Legacy Board shall have recommended approval of an Acquisition Proposal or (iv) Legacy shall have materially breached its obligations under Section 6.2 by failing to call, give notice of, convene and hold the Legacy Meeting.
	(g) Superior Proposal. At any time prior to the date of mailing of the Proxy Statement, by Legacy in order to enter concurrently into an Acquisition Proposal that has been received by Legacy and the Legacy Board of Directors in compliance with Sections 6.8(a) and (b) and that Legacy’s Board of Directors concludes in good faith, in consultation with its financial and legal advisors, that such Acquisition Proposal is a Superior Proposal; provided, however, that this Agreement may be terminated by Legacy pursuant to this Section 8.1(g) only after the fifth Business Day following Legacy’s provision of written notice to Parent advising Parent, that the Legacy Board of Directors is prepared to accept a Superior Proposal (it being agreed that the delivery of such notice shall not entitle Parent to terminate this Agreement pursuant to Section 8.1(g)) and only if (i) during such five-Business Day period, Legacy has caused its financial and legal advisors to negotiate with Parent in good faith to make such adjustments in the terms and conditions of this Agreement such that such Acquisition Proposal would no longer constitute a Superior Proposal, (ii) Legacy’s Board of Directors has considered such adjustments in the terms and conditions of this Agreement resulting from such negotiations and has concluded in good faith, based upon consultation with its financial and legal advisers, that such Acquisition Proposal remains a Superior Proposal even after giving effect to the adjustments proposed by Parent and further provided that such termination shall not be effective until Legacy has paid the Break-up Fee to Parent.
	(h) Possible Adjustment. By Legacy at any time during the two-business- day period following the Determination Date, if both of the following conditions (i) and (ii) are satisfied:

	(i) the Average Closing Price determined as of the Determination Date shall be less than the product of 0.800 and the Starting Price; and
	(ii) the number obtained by dividing the Average Closing Price on the Determination Date by the Starting Price, such number being referred to herein as the “Parent Ratio”, shall be less than the number obtained by dividing the Index Closing Price by the Starting Index Price, such number being referred to herein as the “Index Ratio”, and subtracting 0.200 from such quotient;

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	The Legacy Bank
	2600 Commerce Drive
	Harrisburg, Pennsylvania 17110

	Attention:	George H. Groves

	Chairman and Chief Executive Officer
	Fax: 717-441-3410

	Stevens & Lee
	25 N. Queen Street, Suite 602
	Lancaster, PA 17608-1594
	Attention: Clinton W. Kemp, Esq.
	Fax: 610-236-4177

	F.N.B. Corporation
	One F.N.B. Boulevard
	Hermitage, Pennsylvania 16148

	Attention:	Stephen J. Gurgovits

	President and Chief Executive Officer
	Fax: (724) 983-3515

	Duane Morris LLP
	30 South 17th Street
	Philadelphia, PA 19103
	Attention: Frederick W. Dreher, Esq.
	Fax: (215) 979-1213

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	F.N.B. CORPORATION

	By:

	Stephen J. Gurgovits,
	President and Chief Executive Officer
	FIRST NATIONAL BANK OF PENNSYLVANIA

	By:

	Stephen J. Gurgovits,
	Chairman
	THE LEGACY BANK

	By:

	George H. Groves,
	Chairman and Chief Executive Officer

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	1. The Merger. Subject to the terms and conditions of the Agreement and this Agreement of Merger, at the Effective Time (as defined in Section 2), The Legacy Trust Company shall merge with and into Parent Trust Company (the “Trust Company Merger”) under the laws of the United States and of the Commonwealth of Pennsylvania. Parent Trust Company shall be the surviving bank of the Trust Company Merger (the “Surviving Trust Company”).
	2. Effective Time. The Trust Company Merger shall become effective on the date and at the time that Articles of Combination are filed with the Office of the Comptroller of the Currency (the “OCC”) and Articles of Merger are filed with the Pennsylvania Department of State (the “Department”) unless a later date and time is specified as the Effective Time in such Articles of Combination and Articles of Merger (the “Effective Time”).
	3. Charter; Bylaws. The Charter and Bylaws of Parent Trust Company in effect immediately prior to the Effective Time shall be the Charter and Bylaws of the Surviving Trust Company, until altered, amended or repealed in accordance with their terms and applicable law.
	4. Name; Offices. The name of the Surviving Trust Company shall be “First National Trust Company.” The main office of the Surviving Trust Company shall be the main office of Parent Trust Company immediately prior to the Effective Time. All offices of The Legacy Trust Company and Parent Trust Company that were in lawful operation immediately prior to the Effective Time shall be the offices of the Surviving Trust Company upon consummation of the Trust Company Merger, subject to the opening or closing of any offices that may be authorized by The Legacy Trust Company, Parent Trust Company, the OCC or the Department after the date hereof. Schedule I hereto contains a list of each of the offices of The Legacy Trust Company and Parent Trust Company that shall be operated by the Surviving Trust Company, subject to the opening or closing of any offices that may be authorized by The Legacy Trust Company, Parent Trust Company, the OCC and the Department after the date hereof.
	5. Directors and Executive Officers. Upon consummation of the Merger, (i) the directors of the Surviving Trust Company immediately prior to the Effective Time shall continue as directors of the

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	Surviving Trust Company to serve until the first annual meeting of stockholders following the Effective Time and (ii) the executive officers of the Surviving Trust Company shall be the executive officers of Parent Trust Company immediately prior to the Effective Time.
	6. Effects of the Merger. Upon consummation of the Trust Company Merger, and in addition to the effects set forth at 12 U.S.C. § 215a and the Pennsylvania Banking Code and other applicable law:

	(a) all rights, franchises and interests of The Legacy Trust Company in and to every type of property (real, personal and mixed), tangible and intangible, and choses in action shall be transferred to and vested in the Surviving Trust Company by virtue of the Trust Company Merger without any deed or other transfer, and the Surviving Trust Company, without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises and interests, including appointments, designations and nominations, and all other rights and interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver and committee, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises and interest were held or enjoyed by The Legacy Trust Company immediately prior to the Effective Time; and
	(b) the Surviving Trust Company shall be liable for all liabilities of The Legacy Trust Company, fixed or contingent, including all deposits, accounts, debts, obligations and contracts thereof, matured or unmatured, whether accrued, absolute, contingent or otherwise, and whether or not reflected or reserved against on balance sheets, books of account or records thereof, and all rights of creditors or obligees and all liens on property of The Legacy Trust Company shall be preserved unimpaired; after the Effective Time, the Surviving Trust Company will continue to issue savings accounts on the same basis as immediately prior to the Effective Time.

	7. Effect on Shares of Stock.

	(a) Each share of Parent Trust Company common stock issued and outstanding immediately prior to the Effective Time shall be unchanged and shall remain issued and outstanding.
	(b) At the Effective Time, each share of The Legacy Trust Company capital stock issued and outstanding prior to the Trust Company Merger shall, by virtue of the Trust Company Merger and without any action on the part of the holder thereof, be canceled. Any shares of The Legacy Trust Company capital stock held in the treasury of The Legacy Trust Company immediately prior to the Effective Time shall be retired and canceled.

	8. Additional Actions. If, at any time after the Effective Time, the Surviving Trust Company shall consider that any further assignments or assurances in law or any other acts are necessary or desirable to (a) vest, perfect or confirm, of record or otherwise, in the Surviving Trust Company its rights, title or interest in, to or under any of the rights, properties or assets of The Legacy Trust Company acquired or to be acquired by the Surviving Trust Company as a result of, or in connection with, the Trust Company Merger, or (b) otherwise carry out the purposes of this Agreement of Merger, The Legacy Trust Company and its proper officers and directors shall be deemed to have granted to the Surviving Trust Company an irrevocable power of attorney to (i) execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Trust Company and (ii) otherwise to carry out the purposes of this Agreement of Merger. The proper officers and directors of the Surviving Trust Company are fully authorized in the name of The Legacy Trust Company or otherwise to take any and all such action.
	9. Counterparts. This Agreement of Merger may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one agreement.
	10. Governing Law. This Agreement of Merger shall be governed in all respects, including, but not limited to, validity, interpretation, effect and performance, by the laws of the United States and the Commonwealth of Pennsylvania.

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	11. Amendment. Subject to applicable law, this Agreement of Merger may be amended, modified or supplemented only by written agreement of Parent Trust Company and The Legacy Trust Company at any time prior to the Effective Time.
	12. Waiver. Any of the terms or conditions of this Agreement of Merger may be waived at any time by whichever of the parties hereto is, or the shareholders of which are, entitled to the benefit thereof by action taken by the Board of Directors of such waiving party.
	13. Assignment. This Agreement of Merger may not be assigned by any party hereto without the prior written consent of the other party.
	14. Termination. This Agreement of Merger shall terminate upon the termination of the Agreement in accordance with its terms.
	15. Procurement of Approvals. This Agreement of Merger shall be subject to the approval of Parent as the sole stockholder of Parent Trust Company and Legacy as the sole shareholder of The Legacy Trust Company at meetings to be called and held or by consent in lieu thereof in accordance with the applicable provisions of law and their respective organizational documents. Parent Trust Company and The Legacy Trust Company shall proceed expeditiously and cooperate fully in the procurement of any other consents and approvals and in the taking of any other action, and the satisfaction of all other requirements prescribed by law or otherwise necessary for consummation of the Merger on the terms provided herein, including without limitation the preparation and submission of such applications or other filings for approval of the Merger to the OCC and the Department as may be required by applicable laws and regulations.
	16. Conditions Precedent. The obligations of the parties under this Agreement of Merger shall be subject to: (i) the approval of this Agreement of Merger by Parent as the sole shareholder of Parent Trust Company and Legacy as the sole stockholder of The Legacy Trust Company at meetings of shareholders duly called and held or by consent or consents in lieu thereof, in each case without any exercise of such dissenters’ rights as may be applicable; (ii) receipt of approval of the Merger from all governmental and banking authorities whose approval is required; (iii) receipt of any necessary regulatory approval to operate the main office and the offices of The Legacy Trust Company as offices of the Surviving Trust Company and (iv) the consummation of the Parent Merger pursuant to the Agreement on or before the Effective Time.
	17. Effectiveness of Agreement. Notwithstanding anything to the contrary contained herein, the execution and delivery of this Agreement of Merger by the parties hereto shall not be deemed to be effective unless and until the requirements of 12 C.F.R. § 5.33 are met.

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	FIRST NATIONAL TRUST COMPANY

	By:

	President and Chief Executive Officer
	THE LEGACY TRUST COMPANY

	By:

	President

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“The shares represented by this certificate were issued as a result of the merger of The Legacy Bank with and into F.N.B. Corporation, on                     , 2006 in a transaction to which Rule 145 promulgated under the Securities Act of 1933 applies. The shares represented by this certificate may be transferred only in accordance with the terms of a letter agreement between the registered holder hereof and F.N.B. Corporation, a copy of which agreement is on file at the principal offices of F.N.B. Corporation.

	“The shares represented by this certificate have not been registered under the Securities Act of 1933 and were acquired from [SHAREHOLDER] who, in turn, received such shares as a result of the

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merger of The Legacy Bank with and into F.N.B. Corporation on                     , 2006 in a transaction to which Rule 145 under the Securities Act of 1933 applies. The shares have been acquired by the holder not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933 and may not be offered, sold, pledged or otherwise transferred except in accordance with an exemption from the registration requirements of the Securities Act of 1933.”

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	Very truly yours,
	Name:

Acknowledged this                     day of                     , 2006.
F.N.B. CORPORATION

By:

[name]
[title]

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	(a) I agree to vote or cause to be voted for approval and adoption of the Agreement and the transactions contemplated thereby all shares of Legacy common stock over which I have or share voting power, individually or, to the extent of my proportionate interest, jointly with other persons, and will use my reasonable best efforts to cause any shares of Legacy common stock over which I share voting power to be voted for approval and adoption of the Agreement and the transactions contemplated thereby. Beneficial ownership shall have the meaning assigned to it under the Securities Exchange Act of 1934.
	(b) On or prior to the record date for the meeting of the Legacy shareholders to vote on approval and adoption of the Agreement and the transactions contemplated thereby, I agree not to offer, sell, transfer or otherwise dispose of, or to permit the offer, sale, transfer or other disposition of, any shares of Legacy common stock over which I have sole or shared voting power and beneficial ownership, except to the extent that I may be permitted under law to make charitable gifts or as permitted by paragraph (g) hereof.
	(c) I have sole or shared beneficial ownership over the number of shares of Legacy common stock, and hold stock options for the number of shares of Legacy common stock, if any, set forth below opposite my name below.
	(d) I agree that Legacy shall not be bound by any attempted sale of any shares of Legacy common stock over which I have sole voting power, and Legacy’s transfer agent shall be given appropriate stop transfer orders and shall not be required to register any such attempted sale, unless the sale has been effected in compliance with the terms of this Letter Agreement.
	(e) I agree that, if I exercise any options to purchase common stock, I will not sell any of the shares of Legacy common stock so acquired except as part of a cashless exercise transaction from the date of such exercise until the Effective Time.

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	(f) I represent that I have the capacity to enter into this Letter Agreement and that it is a valid and binding obligation enforceable against me in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting creditors’ rights and general equitable principles.
	(g) I may transfer any or all of the shares of Legacy common stock over which I have sole or shared beneficial ownership to my spouse, ancestors or descendants; provided, however, that in any such case, prior to and as a condition to the effectiveness of such transfer, each person to which any of such shares or any interest in any of such shares is or may be transferred shall have executed and delivered to FNB an agreement to be bound by the terms of this Letter Agreement. In addition, I may sell, transfer or assign shares of Legacy Common Stock to the extent and on behalf of trusts or estates of which I am not a beneficiary in order to comply with fiduciary obligations or legal requirements.

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	Very truly yours,
	[Name]

By:

By:

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	(a) the Termination Date of the Initial Term as described in Section 2(a) herein; or
	(b) the anniversary as determined by the Renewal Commencement Date as described in Section 2(b) herein.

	Example of Initial Term: In the event the Commencement Date is December 15, 2005, the Initial Term is December 15, 2005, to December 14, 2007;
	Example of Renewal Extension Term: The Renewal Extension Term of this Agreement will automatically renew for an additional one (1) year term on December 15, 2006, and on each December 15th thereafter for an additional one (1) year term; therefore, on December 15, 2006, the Renewal Extension Term runs from December 15, 2006 to December 14, 2008; and
	Example of Non-Renewal: In the event written notice of non-renewal is provided to the Officer prior to October 15, 2006 (or any October 15th thereafter), the term of this Agreement will end on December 14, 2007 (or any December 14th thereafter).

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	(a) Salary. The Company shall pay the Officer an annual minimum base salary of $196,000 to be paid in accordance with the Company’s normal payroll practice to be adjusted from time to time to reflect such merit increases as the Company may determine are appropriate (“Base Salary”).
	(b) Participation in Performance and Incentive Compensation and Bonus Plans. At the discretion of the Compensation Committee of FNB, the Officer shall be entitled to participate in incentive compensation and such other bonus plans comparable to those given to similarly-positioned officers of the Company or its present or future subsidiaries or affiliates only during the term of Officer’s employment with the Company.
	(c) Fringe Benefits. The Officer shall be entitled to vacations, retirement benefits and other fringe benefits, including but not limited to group life, disability and health insurance coverages comparable with those furnished to similarly positioned officers of the Company and consistent with the prevailing compensation policies and practices of the Company (now and in the future) as they may change from time to time, with respect to similarly-positioned officers of the Company or its present or future subsidiaries or affiliates.
	(d) Automobile Allowance. The Company shall provide the Officer with the use of a corporate owned or leased automobile of a model and year reasonably commensurate with his position. Expenses for insurance, maintenance and operation shall be borne by the Company.
	(e) Group Life Insurance. The Officer shall be entitled to participate in the Company’s group life insurance policy. The terms and other provisions relating to such insurance shall comply with the provisions of Section 409A of the Code.
	(f) Disability Insurance. In addition to standard group benefit provisions, the Company shall make available a disability insurance policy for purchase by the Officer, provided the Officer qualifies as a medically acceptable risk to the issuing company on a standard underwriting basis, which shall provide that in the event the Officer is unable to perform his duties hereunder as a result of incapacity due to physical or mental illness, he shall be entitled to receive at least those benefits from all sources (Social Security, group long-term disability and supplemental long-term disability) equal to 75% of his current Base Salary until he reaches the age of 65 or dies, whichever occurs first. The Company shall continue to pay the Officer his current Base Salary during any applicable “elimination (waiting) period,” but not to exceed 90 days, under the disability insurance plan purchased by the Officer. The terms and other provisions relating to such insurance shall comply with Section 409A of the Code.

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	(1) the perpetration of defalcations by the Officer involving the Company or any of its present or future subsidiaries or affiliates, or willful, reckless or grossly negligent conduct of the Officer entailing a substantial violation of any material provision of the laws, rules, regulations or orders of any governmental agency applicable to the Company or its subsidiaries and affiliates;
	(2) the repeated and deliberate failure by the Officer, after advance written notice, to comply with reasonable policies or directives of the Board of Directors, President, any executive officer or the Officer’s immediate supervisor; or
	(3) the Officer shall breach this Agreement in any other material respect.

	(1) The Officer shall not be considered an employee after the effective date of the termination.
	(2) Company shall pay to Officer an amount equal to two (2) times Officer’s Base Salary at the time of termination (“Separation Pay”).
	(3) Company shall pay the Officer the Separation Pay over a period of twenty-four (24) months in equal installments less all withholdings required by law and authorized deductions, at intervals consistent with Company payroll practices.
	(4) Officer will not be entitled to receive any benefits or bonuses described in Section 3(b) through (f) hereof.
	(5) Officer will be entitled to receive such Separation Pay only if the Officer executes and does not revoke a Release of all claims and liabilities in form prescribed by Company.

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	(6) Following termination without cause, Officer is entitled to elect insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for a period of up to eighteen (18) months following officers termination, and Company shall be obligated to pay on behalf of Officer the monthly premium cost for Officer’s health/medical coverage under COBRA, less the same contribution as required by employee’s group life and health insurance coverages pursuant to the prevailing policies and practices of the Company (now and in the future) with respect to similarly positioned officers of the Company or its present or future subsidiaries or affiliates.
	(7) Nothing herein shall restrict the Officer’s vested rights, if any, pursuant to Company’s 401(k) Plan, Retirement Income Plan, Basic Retirement Plan, 2001 Incentive Plan, or any similar plans. Notwithstanding the Officer receiving any payments under the terms of this Section, on the date of the Officer’s termination, all vesting, for purposes of the Company’s 401(k) Plan, Retirement Income Plan, Basic Retirement Plan, 2001 Incentive Plan, or other such plans, shall cease.

	(1) Officer files a claim, suit or submits any matter to arbitration in violation of the Release executed in connection with Section 8(a)(5) hereof.
	(2) Officer violates any term or condition of this Agreement, including, but not limited to, the Non-Competition, Non-Solicitation and Confidentiality provisions of this Agreement.
	(3) Officer’s misappropriates any trade secrets.
	(4) Company learns that the Officer committed a material breach of the Agreement during the terms of this Agreement.

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	(a) in any way, directly or indirectly, for the purpose of selling any product or service that competes with a product or service offered by the Company or its present or future subsidiaries or affiliates, solicit, divert, or entice:

	(1) any customer or existing business of Company, with whom the Officer solicited, became aware of, or transacted business during the Officer’s employment with Company;
	(2) any potential customer or business identified by Company, with whom the Officer solicited, became aware of, or transacted business during the Officer’s employment with Company;

	(b) employ or assist in employing any present employee of the Company or any of its affiliates (whether or not such employment is full time or is pursuant to a written contract), for the purpose of having such employee perform services for any Competitive Enterprise or other organization in competition with the business of the Company or any of its present or future subsidiaries or affiliates;
	(c) in any way, directly or indirectly, make any oral or written statement, comments, or other communications designed or intended to impugn, disparage or otherwise malign the reputation, ethics, competency, morality or qualifications of the Company or any of its directors or employees or customers.

	(a) It is understood and agreed by and between the parties hereto that the services to be rendered by the Officer hereunder are of a special, unique, extraordinary and intellectual character, which gives them a peculiar value, the loss of which may not be reasonably or adequately compensated in damages, and additionally that a breach by the Officer of the covenants set out in Sections 11, 12 and 13 of this Agreement will cause the Company great and irreparable injury and damage. The Officer hereby expressly agrees that the Company shall be entitled to the remedies of injunction, specific performance and other equitable relief to prevent a breach of Sections 11, 12 and 13 of this Agreement by the Officer. This provision shall not, however, be construed as a waiver of any of the remedies which the Company may have for damages or otherwise.
	(b) In the event the Officer shall be in violation of any of the aforementioned restrictive covenants, the time limitation thereof with respect to them shall be extended for a period of time equal to the period of time during which breach or breaches should occur; and in the event the Company should be required to seek relief from such breach in any court, board of arbitration or other tribunal, the covenants shall be extended for a period of time equal to the pendency of such proceedings, including appeals.

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	(1) To the Company, at the address designated as its headquarters, Attention: CEO. With a copy to F.N.B. Corporation, One F.N.B. Boulevard, 1st Floor, Hermitage, Pennsylvania 16148, Attention: Corporate Counsel.
	(2) To the Officer, at his/her address provided to Company from time to time for salary and other similar purposes.

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WITNESS:
		George Groves
ATTEST:		FIRST NATIONAL BANK OF PENNSYLVANIA
		By:
Secretary		Stephen J. Gurgovits    Chairman

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	(a) the Termination Date of the Initial Term as described in Section 2(a) herein; or
	(b) the anniversary as determined by the Renewal Commencement Date as described in Section 2(b) herein.

	Example of Initial Term: In the event the Commencement Date is December 15, 2005, the Initial Term is December 15, 2005, to December 14, 2007;
	Example of Renewal Extension Term: The Renewal Extension Term of this Agreement will automatically renew for an additional one (1) year term on December 15, 2006, and on each December 15th thereafter for an additional one (1) year term; therefore, on December 15, 2006, the Renewal Extension Term runs from December 15, 2006 to December 14, 2008; and
	Example of Non-Renewal: In the event written notice of non-renewal is provided to the employee prior to October 15, 2006 (or any October 15th thereafter), the term of this Agreement will end on December 14, 2007 (or any December 14th thereafter).

	(a) Salary. The Company shall pay Officer an annual minimum base salary of $165,000 to be paid in accordance with the Company’s normal payroll practice to be adjusted from time to time to reflect such merit increases as the Company may determine are appropriate.

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	(b) Participation in Performance and Incentive Compensation and Bonus Plans. At the discretion of the Compensation Committee of F.N.B. Corporation, the Officer shall be entitled to participate in incentive compensation and such other bonus plans comparable to those given to similarly-positioned officers of the Company or its present or future subsidiaries or affiliates only during the term of Officer’s employment with the Company.
	(c) Fringe Benefits. The Officer shall be entitled to vacations, retirement benefits and other fringe benefits, including but not limited to group life, disability and health insurance coverages comparable with those furnished to similarly positioned officers of the Company and consistent with the prevailing compensation policies and practices of the Company (now and in the future) as they may change from time to time, with respect to similarly-positioned officers of the Company or its present or future subsidiaries or affiliates.

	(1) the perpetration of defalcations by the Officer involving the Company or any of its present or future subsidiaries or affiliates, or willful, reckless or grossly negligent conduct of the Officer entailing a substantial violation of any material provision of the laws, rules, regulations or orders of any governmental agency applicable to the Company or its subsidiaries and affiliates;

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	(2) the repeated and deliberate failure by the Officer, after advance written notice, to comply with reasonable policies or directives of the Board of Directors, President, any executive officer or the Officer’s immediate supervisor; or
	(3) the Officer shall breach this Agreement in any other material respect.

	(1) The Officer shall not be considered an employee after the effective date of the termination.
	(2) Company shall pay to Officer an amount equal to two (2) times Officer’s annual salary at the time of termination (“Separation Pay”).
	(3) Company shall pay the Officer the Separation Pay over a period of twenty-four (24) months in equal installments less all withholdings required by law and authorized deductions, at intervals consistent with Company payroll practices.
	(4) Officer will not be entitled to receive any benefits or bonuses described in Section 3(b) and (c) hereof.
	(5) Officer will be entitled to receive such Separation Pay only if the Officer executes and does not revoke a Release of all claims and liabilities in form prescribed by Company.
	(6) Following termination without cause, Officer is entitled to elect insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for a period of up to eighteen (18) months following officers termination, and Company shall be obligated to pay on behalf of Officer the monthly premium cost for Officer’s health/medical coverage under COBRA, less the same contribution as required by employee’s group life and health insurance coverages pursuant to the prevailing policies and practices of the Company (now and in the future) with respect to similarly positioned officers of the Company or its present or future subsidiaries or affiliates.
	(7) Nothing herein shall restrict the Officer’s vested rights, if any, pursuant to Company’s 401(k) Plan, Retirement Income Plan, Basic Retirement Plan, 2001 Incentive Plan, or any similar plans. Notwithstanding the Officer receiving any payments under the terms of this Section, on the date of the Officer’s termination, all vesting, for purposes of the Company’s 401(k) Plan, Retirement Income Plan, Basic Retirement Plan, 2001 Incentive Plan, or other such plans, shall cease.

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	(1) Officer files a claim, suit or submits any matter to arbitration in violation of the Release executed in connection with Section 8(a)(5) hereof.
	(2) Officer violates any term or condition of this Agreement, including, but not limited to, the Non-Competition, Non-Solicitation and Confidentiality provisions of this Agreement.
	(3) Officer’s misappropriates any trade secrets.
	(4) Company learns that the Officer committed a material breach of the Agreement during the terms of this Agreement.

	(1) accept a position as director, employee, consultant, advisor or agent of any Competitive Enterprise which is located in any county in the Company’s region to which Officer is assigned at the time of Officer’s termination of employment and any contiguous county and any county in the Company’s region to which Officer was assigned 24 months prior to Officer’s termination of employment.

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(2) acquire an ownership interest (individually or in concert with others) in a Competitive Enterprise whereby said ownership interest enables Officer to, directly or indirectly, in any manner, control, direct, influence, affect or impact the operations, services or business activities of the Competitive Enterprise in any county, or county contiguous thereto, in which Company or its subsidiaries operate an office at the time of Officer’s termination of employment;

	(a) in any way, directly or indirectly, for the purpose of selling any product or service that competes with a product or service offered by the Company or its present or future subsidiaries or affiliates, solicit, divert, or entice:

	(1) any customer or existing business of Company, with whom the Officer solicited, became aware of, or transacted business during Officer’s employment with Company;
	(2) any potential customer or business identified by Company, with whom the Officer solicited, became aware of, or transacted business during Officer’s employment with Company;

	(b) employ or assist in employing any present employee of the Company or any of its affiliates (whether or not such employment is full time or is pursuant to a written contract), for the purpose of having such employee perform services for any Competitive Enterprise or other organization in competition with the business of the Company or any of its present or future subsidiaries or affiliates;
	(c) in any way, directly or indirectly, make any oral or written statement, comments, or other communications designed or intended to impugn, disparage or otherwise malign the reputation, ethics, competency, morality or qualifications of the Company or any of its directors or employees or customers.

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	(a) It is understood and agreed by and between the parties hereto that the services to be rendered by the Officer hereunder are of a special, unique, extraordinary and intellectual character, which gives them a peculiar value, the loss of which may not be reasonably or adequately compensated in damages, and additionally that a breach by the Officer of the covenants set out in Sections 11, 12, 13 and 14 of this Agreement will cause the Company great and irreparable injury and damage. The Officer hereby expressly agrees that the Company shall be entitled to the remedies of injunction, specific performance and other equitable relief to prevent a breach of Sections 11, 12, 13 and 14 of this Agreement by the Officer. This provision shall not, however, be construed as a waiver of any of the remedies which the Company may have for damages or otherwise.
	(b) In the event Officer shall be in violation of any of the aforementioned restrictive covenants, the time limitation thereof with respect to them shall be extended for a period of time equal to the period of time during which breach or breaches should occur; and in the event the Company should be required to seek relief from such breach in any court, board of arbitration or other tribunal, the covenants shall be extended for a period of time equal to the pendency of such proceedings, including appeals.

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	(1) To the Company, at the address designated as its headquarters, Attention: CEO. With a copy to F.N.B. Corporation, One F.N.B. Boulevard, 1st Floor, Hermitage, Pennsylvania 16148, Attention: Corporate Counsel.
	(2) To the Officer, at his/her address provided to Company from time to time for salary and other similar purposes.

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WITNESS:
		Thomas W. Lennox
ATTEST:		FIRST NATIONAL BANK OF PENNSYLVANIA
		By:
Secretary		Stephen J. Gurgovits Chairman

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	(c) the Termination Date of the Initial Term as described in Section 2(a) herein; or
	(d) the anniversary as determined by the Renewal Commencement Date as described in Section 2(b) herein.

	Example of Initial Term: In the event the Commencement Date is December 15, 2005, the Initial Term is December 15, 2005, to December 14, 2007;
	Example of Renewal Extension Term: The Renewal Extension Term of this Agreement will automatically renew for an additional one (1) year term on December 15, 2006, and on each December 15th thereafter for an additional one (1) year term; therefore, on December 15, 2006, the Renewal Extension Term runs from December 15, 2006 to December 14, 2008; and
	Example of Non-Renewal: In the event written notice of non-renewal is provided to the employee prior to October 15, 2006 (or any October 15th thereafter), the term of this Agreement will end on December 14, 2007 (or any December 14th thereafter).

	(a) Salary. The Company shall pay Officer an annual minimum base salary of $140,000 to be paid in accordance with the Company’s normal payroll practice to be adjusted from time to time to reflect such merit increases as the Company may determine are appropriate.

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	(b) Participation in Performance and Incentive Compensation and Bonus Plans. At the discretion of the Compensation Committee of F.N.B. Corporation, the Officer shall be entitled to participate in incentive compensation and such other bonus plans comparable to those given to similarly-positioned officers of the Company or its present or future subsidiaries or affiliates only during the term of Officer’s employment with the Company.
	(c) Fringe Benefits. The Officer shall be entitled to vacations, retirement benefits and other fringe benefits, including but not limited to group life, disability and health insurance coverages comparable with those furnished to similarly positioned officers of the Company and consistent with the prevailing compensation policies and practices of the Company (now and in the future) as they may change from time to time, with respect to similarly-positioned officers of the Company or its present or future subsidiaries or affiliates.

	(1) the perpetration of defalcations by the Officer involving the Company or any of its present or future subsidiaries or affiliates, or willful, reckless or grossly negligent conduct of the Officer entailing a substantial violation of any material provision of the laws, rules, regulations or orders of any governmental agency applicable to the Company or its subsidiaries and affiliates;

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	(2) the repeated and deliberate failure by the Officer, after advance written notice, to comply with reasonable policies or directives of the Board of Directors, President, any executive officer or the Officer’s immediate supervisor; or
	(3) the Officer shall breach this Agreement in any other material respect.

	(1) The Officer shall not be considered an employee after the effective date of the termination.
	(2) Company shall pay to Officer an amount equal to two (2) times Officer’s annual salary at the time of termination (“Separation Pay”).
	(3) Company shall pay the Officer the Separation Pay over a period of twenty-four (24) months in equal installments less all withholdings required by law and authorized deductions, at intervals consistent with Company payroll practices.
	(4) Officer will not be entitled to receive any benefits or bonuses described in Section 3(b) and (c) hereof.
	(5) Officer will be entitled to receive such Separation Pay only if the Officer executes and does not revoke a Release of all claims and liabilities in form prescribed by Company.
	(6) Following termination without cause, Officer is entitled to elect insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for a period of up to eighteen (18) months following officers termination, and Company shall be obligated to pay on behalf of Officer the monthly premium cost for Officer’s health/medical coverage under COBRA, less the same contribution as required by employee’s group life and health insurance coverages pursuant to the prevailing policies and practices of the Company (now and in the future) with respect to similarly positioned officers of the Company or its present or future subsidiaries or affiliates.
	(7) Nothing herein shall restrict the Officer’s vested rights, if any, pursuant to Company’s 401(k) Plan, Retirement Income Plan, Basic Retirement Plan, 2001 Incentive Plan, or any similar plans. Notwithstanding the Officer receiving any payments under the terms of this Section, on the date of the Officer’s termination, all vesting, for purposes of the Company’s 401(k) Plan, Retirement Income Plan, Basic Retirement Plan, 2001 Incentive Plan, or other such plans, shall cease.

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	(1) Officer files a claim, suit or submits any matter to arbitration in violation of the Release executed in connection with Section 8(a)(5) hereof.
	(2) Officer violates any term or condition of this Agreement, including, but not limited to, the Non-Competition, Non-Solicitation and Confidentiality provisions of this Agreement.
	(3) Officer’s misappropriates any trade secrets.
	(4) Company learns that the Officer committed a material breach of the Agreement during the terms of this Agreement.

	(1) accept a position as director, employee, consultant, advisor or agent of any Competitive Enterprise which is located in any county in the Company’s region to which Officer is assigned at the time of Officer’s termination of employment and any contiguous county and any county in the Company’s region to which Officer was assigned 24 months prior to Officer’s termination of employment.

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(2) acquire an ownership interest (individually or in concert with others) in a Competitive Enterprise whereby said ownership interest enables Officer to, directly or indirectly, in any manner, control, direct, influence, affect or impact the operations, services or business activities of the Competitive Enterprise in any county, or county contiguous thereto, in which Company or its subsidiaries operate an office at the time of Officer’s termination of employment;

	(a) in any way, directly or indirectly, for the purpose of selling any product or service that competes with a product or service offered by the Company or its present or future subsidiaries or affiliates, solicit, divert, or entice:

	(1) any customer or existing business of Company, with whom the Officer solicited, became aware of, or transacted business during Officer’s employment with Company;
	(2) any potential customer or business identified by Company, with whom the Officer solicited, became aware of, or transacted business during Officer’s employment with Company;

	(b) employ or assist in employing any present employee of the Company or any of its affiliates (whether or not such employment is full time or is pursuant to a written contract), for the purpose of having such employee perform services for any Competitive Enterprise or other organization in competition with the business of the Company or any of its present or future subsidiaries or affiliates;
	(c) in any way, directly or indirectly, make any oral or written statement, comments, or other communications designed or intended to impugn, disparage or otherwise malign the reputation, ethics, competency, morality or qualifications of the Company or any of its directors or employees or customers.

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	(a) It is understood and agreed by and between the parties hereto that the services to be rendered by the Officer hereunder are of a special, unique, extraordinary and intellectual character, which gives them a peculiar value, the loss of which may not be reasonably or adequately compensated in damages, and additionally that a breach by the Officer of the covenants set out in Sections 11, 12, 13 and 14 of this Agreement will cause the Company great and irreparable injury and damage. The Officer hereby expressly agrees that the Company shall be entitled to the remedies of injunction, specific performance and other equitable relief to prevent a breach of Sections 11, 12, 13 and 14 of this Agreement by the Officer. This provision shall not, however, be construed as a waiver of any of the remedies which the Company may have for damages or otherwise.
	(b) In the event Officer shall be in violation of any of the aforementioned restrictive covenants, the time limitation thereof with respect to them shall be extended for a period of time equal to the period of time during which breach or breaches should occur; and in the event the Company should be required to seek relief from such breach in any court, board of arbitration or other tribunal, the covenants shall be extended for a period of time equal to the pendency of such proceedings, including appeals.

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	(1) To the Company, at the address designated as its headquarters, Attention: CEO. With a copy to F.N.B. Corporation, One F.N.B. Boulevard, 1st Floor, Hermitage, Pennsylvania 16148, Attention: Corporate Counsel.
	(2) To the Officer, at his/her address provided to Company from time to time for salary and other similar purposes.

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WITNESS:
		Joseph L. Paese
ATTEST:		FIRST NATIONAL BANK OF PENNSYLVANIA
		By:
Secretary				Stephen J. Gurgovits Chairman

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	(i) reviewed certain publicly available financial statements and other information of FNB and Legacy, respectively, which we believe to be relevant;
	(ii) reviewed certain internal financial statements and other financial and operating data concerning each of FNB and Legacy;
	(iii) discussed the past and current operations, financial condition and the prospects of each of FNB and Legacy with senior executives of FNB and Legacy, respectively, including with respect to FNB (x) the potential impact on FNB of the Transaction, including potential cost savings, synergies and other strategic, financial and operational benefits which management of FNB expects to realize from the combination of FNB and Legacy, and (y) the forecasted impact of the proposed Transaction on the future financial performance of FNB;
	(iv) reviewed earnings per share consensus estimates for FNB for the years ending December 31, 2005 and 2006;
	(v) reviewed the publicly reported historical price and trading activity for Legacy Common Stock and FNB Common Stock, including a comparison of certain financial and stock market information for Legacy and FNB with similar publicly available information for certain other financial institutions the securities of which are publicly traded;
	(vi) participated in discussions and negotiations between FNB and Legacy;

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	(vii) reviewed a draft of the Merger Agreement;
	(viii) considered the competitive environment for financial institutions; and
	(ix) performed comparable company, selected reference transaction, pro forma merger, and discounted dividend analyses.

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	Very truly yours,

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Item 20.	Indemnification of Directors and Officers.

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Item 21.	Exhibits and Financial Statement Schedules.

Exhibit No.				Description of Exhibit
	2	.1		Agreement and Plan of Merger dated as of December 21 2005 among F.N.B. Corporation, First National Bank of Pennsylvania and The Legacy Bank (included as Appendix A to this proxy statement/ prospectus)
	5	.1		Opinion of Duane Morris LLP
	8	.1		Tax Opinion of Duane Morris LLP
	10	.1		Employment Agreement dated as of December 21, 2005 between George H. Groves and First National Bank of Pennsylvania
	10	.2		Employment Agreement dated as of December 21, 2005 between Thomas W. Lennox and First National Bank of Pennsylvania
	10	.3		Employment Agreement dated as of December 21, 2005 between Joseph L. Paese and First National Bank of Pennsylvania
	15	.1		Acknowledgement of Ernst & Young LLP dated January 30, 2006 to the Board of Directors and Stockholders of F.N.B. Corporation
	23	.1		Consent of Ernst & Young LLP
	23	.2		Consent of Beard Miller Company LLP
	23	.3		Consent of Griffin Financial Group, LLC
	23	.4		Consent of Duane Morris LLP (included in Exhibits 5.1 and 8.1)
	99	.1		Proxy for Special Meeting of Shareholders of The Legacy Bank
	99	.2		Form of Election Form/ Transmittal Letter

Item 22.	Undertakings.

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change in such information in the registration statement.

	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

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	F.N.B. CORPORATION

	By:	/s/ Stephen J. Gurgovits

	Stephen J. Gurgovits
	President and Chief Executive Officer

Signature				Title		Date
Peter Mortensen				Chairman of the Board		January 31, 2006
/s/ Stephen J. Gurgovits Stephen J. Gurgovits				President, Chief Executive Officer and Director (principal executive officer)		January 31, 2006
/s/ Brian F. Lilly Brian F. Lilly				Vice President and Chief Financial Officer (principal financial and accounting officer)		January 31, 2006
William B. Campbell				Director		January 31, 2006
/s/ Henry M. Ekker Henry M. Ekker				Director		January 31, 2006
/s/ Robert B. Goldstein Robert B. Goldstein				Director		January 31, 2006
/s/ David J. Malone David J. Malone				Director		January 31, 2006

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Signature				Title		Date
Harry F. Radcliffe				Director		January 31, 2006
John W. Rose				Director		January 31, 2006
/s/ William J. Strimbu William J. Strimbu				Director		January 31, 2006
/s/ Earl K. Wahl, Jr. Earl K. Wahl, Jr.				Director		January 31, 2006
Archie O. Wallace				Director		January 31, 2006

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Exhibit No.				Description of Exhibit
	2	.1		Agreement and Plan of Merger dated as of December 21 2005 among F.N.B. Corporation, First National Bank of Pennsylvania and The Legacy Bank (included as Appendix A to this proxy statement/ prospectus)
	5	.1		Opinion of Duane Morris LLP
	8	.1		Tax Opinion of Duane Morris LLP
	10	.1		Employment Agreement dated as of December 21, 2005 between George H. Groves and First National Bank of Pennsylvania
	10	.2		Employment Agreement dated as of December 21, 2005 between Thomas W. Lennox and First National Bank of Pennsylvania
	10	.3		Employment Agreement dated as of December 21, 2005 between Joseph L. Paese and First National Bank of Pennsylvania
	15	.1		Acknowledgement of Ernst & Young LLP dated January 30, 2006 to the Board of Directors and Stockholders of F.N.B. Corporation
	23	.1		Consent of Ernst & Young LLP
	23	.2		Consent of Beard Miller Company LLP
	23	.3		Consent of Griffin Financial Group, LLC
	23	.4		Consent of Duane Morris LLP (included in Exhibits 5.1 and 8.1)
	99	.1		Proxy for Special Meeting of Shareholders of The Legacy Bank
	99	.2		Form of Election Form/ Transmittal Letter