Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 18 – Shareholders' Equity

Earnings per Share

FNB filed articles of amendment to its articles of incorporation on October 31, 2011 to effect a one-for-one hundred reverse stock split (the "Reverse Stock Split") of its common stock. The amendment became effective following the close of trading on October 31, 2011. With the filing of this annual Report on Form 10-K, share and per share amounts have been retrospectively adjusted for the Reverse Stock Split. A purpose of the Reverse Stock Split is to increase the per share trading price of FNB's common stock to satisfy the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market. As a result of the Reverse Stock Split, every 100 shares of FNB's common stock issued and outstanding prior to the opening of trading on November 1, 2011 will be consolidated into one issued and outstanding share. No fractional shares will be issued as a result of the Reverse Stock Split. Instead, any fractional share resulting from the Reverse Stock Split will be rounded up to the next largest whole share. All share and per share amounts have been retroactively adjusted in the financial statements and footnotes to account for the impact of the Reverse Stock Split.

Basic net loss per share, or basic earnings/(loss) per share ("EPS"), is computed by dividing net loss to common shareholders by the weighted average number of common shares outstanding for the period.

For the twelve months of 2011, and in order the complete the Recapitalization, FNB paid dividends and deferred interest of approximately $4.5 million on Series A preferred stock, in addition to the $0.6 million accretion of the discount on the preferred stock. At December 31, 2011, FNB had no unpaid cumulative dividends.

The following table represents the impact of preferred stock activity on the Consolidated Statement of Operations for the years ended December 31, 2011, 2010, and 2009:

(dollars in thousands)	December 31,
	2011			2010			2009
Gain on the retirement of Series A preferred stock	$	38,625		$	—		$	—
Gain on retirement of Bank preferred stock		9,375			—			—
Total gain on the retirement of preferred stock		48,000			—			—
Dividends and accretion on Series A preferred stock		(2,652	)		(3,294	)		(2,871	)
Dividends on Bank preferred stock		(756	)		—			—
Total dividends on preferred stock		(3,408	)		(3,294	)		(2,871	)
Preferred stock gain on retirement, net of accretion, and dividends	$	44,592		$	(3,294	)	$	(2,871	)

For the twelve months of 2010, FNB paid dividends of approximately $0.3 million on Series A preferred stock, in addition to the $0.7 million accretion of the discount on the preferred stock. At December 31, 2010, FNB had $2.3 million of unpaid cumulative dividends. These amounts combined increased the net loss to common shareholders by $3.3 million.

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

A reconciliation of the denominators of the basic and diluted EPS computations is as follows:

(dollars in thousands)	For the Years Ended December 31,
	2011			2010			2009
Net loss from continuing operations	$	(131,518	)	$	(130,421	)	$	(102,561	)
Preferred stock gain on retirement, net of accretion, and dividends		44,592			(3,294	)		(2,871	)
Net loss from continuing operations attributable to common shareholders		(86,926	)		(133,715	)		(105,432	)
Net (loss)/income from discontinued operations attributable to common shareholders		(5,796	)		(1,406	)		865
Net loss to common shareholders	$	(92,722	)	$	(135,121	)	$	(104,567	)
Weighted average shares of common stock outstanding		4,196,926			114,240			114,170
Basic and Diluted:
Net loss per common share from continuing operations	$	(20.71	)	$	(1,170.48	)	$	(923.47	)
Net (loss)/income per common share from discontinued operations		(1.38	)		(12.31	)		7.58
Net loss per common share		(22.09	)		(1,182.79	)		(915.89	)

Due to a net loss for the twelve month periods ended December 31, 2011, 2010 and 2009; all stock options and the common stock warrant were considered antidilutive and thus are not included in this calculation. Additionally, for the periods ended December 31, 2011 and December 31, 2010, there were 24,818 and 27,051 antidilutive shares, respectively. Of the antidilutive shares, the number of shares relating to stock options were 2,746 at December 31, 2011 and 4,980 at December 31, 2010. Average antidilutive shares relating to the common stock warrant were 22,072 for December 31, 2011 and December 31, 2010. Because the exercise price exceeded the average market price for the periods discussed and because of the net loss, the stock options and common stock warrant were omitted from the calculation of diluted earnings per share for their respective periods. FNB did not have any common stock warrants in 2009.

Stock Based Compensation

For the years ended December 31, 2011, 2010 and 2009, FNB had five share-based compensation plans in effect. The compensation expense charged against income for those plans was $23,000, $50,000 and $405,000 respectively, and the related income tax benefit was $9,000, $7,000 and $85,000, respectively.

FNB adopted stock compensation plans in 1993 and 2003 that allow for the granting of incentive and nonqualified stock options to key employees and directors. The 2003 stock compensation plan also allows for the granting of restricted stock. Under terms of both the 1993 and 2003 plans, options are granted at prices equal to the fair market value of the common stock on the date of grant. Options become exercisable after one year in equal, cumulative installments over a five-year period. No option shall expire later than ten years from the date of grant. No further grants can be made under the 1993 stock compensation plan after March 10, 2003. Based on the stock options outstanding at December 31, 2011, a maximum of 729 shares of common stock has been reserved for issuance under the 1993 stock compensation plan. A maximum of 10,985 shares of common stock has been reserved for issuance under the 2003 stock compensation plan. At December 31, 2011, there were 8,243 shares available under the 2003 plan for the granting of additional options or stock awards.

With the completion of the Merger, each outstanding option to purchase shares of Granite Corp. common stock, whether or not exercisable, was converted into options to purchase FNB common stock. After adjusting for the 100 for 1 stock split and rounding up to the nearest whole share, there were 78 stock options assumed from Granite Corp., of which 77 options were exercisable at December 31, 2011.

FNB assumed three stock compensation plans in its acquisition of Integrity Financial Corporation in 2006. Qualified and nonqualified stock options are outstanding under these plans for grants issued from 1997 to 2004 to key employees and directors at a price equal to fair market value on the date of grant. No additional grants will be made under these plans. Based on the stock options outstanding at December 31, 2011, a maximum of 235 shares of common stock has been reserved for issuance under these stock compensation plans.

The fair market value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on a U.S. Treasury instrument with a life that is similar to the expected life of the option grant. Expected volatility is based on the historical volatility of the FNB's common stock over approximately the previous 6 years. The expected life of the options has historically been considered to be approximately 6 years. The expected dividend yield is based upon the current yield in effect at the date of grant. There were no stock options granted in 2011, 2010 or 2009, respectively.

The following is a summary of stock option activity:

	For the Years Ended December 31,
	2011					2010					2009
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of year		3,658		$	1,857.00		5,353		$	1,701.00		6,627		$	1,656.00
Granted		—			—		—			—		—			—
Assumed		78			267.53		—			—		—			—
Exercised		—			—		—			—		—			—
Forfeited/expired		(994	)		1,829.09		(1,695	)		1,363.00		(1,274	)		1,515.00
Outstanding at end of year		2,742			1,821.79		3,658			1,857.00		5,353			1,701.00
Options exercisable at end of year		2,711			1,825.85		3,596			1,863.00		5,255			1,705.00

At December 31, 2011, information concerning stock options outstanding and exercisable is as follows:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$259 - $392		78		0.50	$	267.53		77	$	267.53
$1,000 - $1,416		189		2.96		1,364.39		182		1,370.57
$1,420 - $1,500		91		2.15		1,433.19		91		1,433.19
$1,585 - $1,615		804		1.18		1,611.42		784		1,612.07
$1,646 - $1,982		785		3.04		1,972.10		782		1,973.35
$2,000 - $2,603		795		1.96		2,191.83		795		2,191.83

In 2011, 2010 and 2009 there was no intrinsic value of options exercised. The 2011, 2010 and 2009 grant-date fair value of options vested was $0, $11,200 and $171,000, respectively. There were no options exercised in 2011.

The following is a summary of non-vested restricted stock activity:

	For the Years Ended December 31,
	2011					2010
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Non-vested at beginning of year		8		$	260.00		102		$	1,144.00
Granted		—			—		—			—
Vested		(4	)		260.00		(94	)		1,219.00
Forfeited/Expired		—			—		—			—
Non-vested at end of year		4		$	260.00		8		$	260.00

The fair value of restricted stock vested in 2011, 2010 and 2009 were $1,040, $114,600 and $388,000, respectively.

As of December 31, 2011, there was $5,605 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all of FNB's stock benefit plans. That cost is expected to be recognized over a weighted-average period of .5 years.

FNB funds the option shares and restricted stock from authorized but unissued shares. FNB does not typically purchase shares to fulfill the obligations of the stock benefit plans. FNB's policy does allow option holders under certain plans to exercise options with seasoned shares.