FNB CORP \VA\, S-4, 2000-09-22

FNB CORP \VA\
S-4, 2000-09-22
NATIONAL COMMERCIAL BANKS

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As Filed with the Securities and Exchange Commission on September 22, 2000
Registration No.______

================================================================================

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

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------

FNB CORPORATION
(Exact name of registrant as specified in its charter)

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<S> <C> <C>
Virginia 6022 54-1791618
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification Number)
incorporation or organization) Classification Code Number)
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105 Arbor Drive
Christiansburg, Virginia 24068
(540) 382-4951
(Address, including Zip Code, and telephone number, including area code, of
registrant's principal executive offices)

Peter A. Seitz, Esquire
FNB Corporation
105 Arbor Drive
Christiansburg, VA 24068
(540) 382-4951
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

With a copy to:

Fred W. Palmore, III, Esquire Richard Fisch, Esquire
Scott M. J. Anderegg, Esquire Malizia Spidi & Fisch, PC
Mays & Valentine, L.L.P. 1301 K Street, N.W.
1111 E. Main Street, 23rd Floor Suite 700 East
P. O. Box 1122 Washington, D.C. 20005
Richmond, VA 23218-1122 (202) 434-4660
(804) 697-1396 (202) 434-4661 (Fax)
(804) 697-1339 (Fax)

Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this registration statement becomes
effective.

If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: [_] If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement number for the
same offering. [_] If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

---------------

Calculation of Registration Fee

<TABLE>
<CAPTION>
=============================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum Aggregate Offering Amount of
Securities to be Amount to be Offering Price Per Price (2) Registration Fee
Registered Registered (1) Share (2)
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<S> <C> <C> <C> <C>
Common Stock, $5.00 431,094 N/A $7,490,258.25 $1,581.94
par value
=============================================================================================================
</TABLE>

(1) Represents the estimated maximum number of shares that may be issued by the
Registrant in the merger described in this Registration Statement.
Includes shares issuable upon the exercise of outstanding stock options
that are exercisable prior to or subsequent to the closing of the merger.
Pursuant to Rule 416, this Registration Statement also covers an
indeterminate number of shares as may become issuable as a result of stock
splits, stock dividends, or similar transactions.

(2) Pursuant to 457(f)(1), the registration fee is based on the market value of
SWVA Bancshares, Inc. common stock, $0.10 par value, on September 20, 2000
($17.375). Pursuant to Rule 457(f)(3), the cash portion of the merger
consideration to be paid by the Registrant has been deducted from the value
of the securities to be received by the Registrant in the merger.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>

[SWVA Letterhead]

September __, 2000

Proposed Merger - Your Vote is Very Important
---------------------------------------------

Dear Fellow Shareholders:

We cordially invite you to attend the annual meeting of the shareholders of
SWVA Bancshares, Inc. ("SWVA") to be held at ________________________________,
on ____________, at __________. The meeting is being held for the following
purposes:

. to elect two directors;

. to ratify the appointment of Cherry Bekaert & Holland LLP as
independent auditors for the fiscal year ending June 30, 2001; and

. to consider and vote on the proposed merger of SWVA with FNB
Corporation ("FNB"), a bank holding company headquartered in
Christiansburg, Virginia and the parent company of First National
Bank. As a result of the merger, shareholders of SWVA will receive
consideration valued at $20.25 for each share of SWVA stock, in the
form of cash, stock of FNB or a combination of cash and stock at each
SWVA shareholder's election. The cash portion of the consideration,
however, will be limited to 20% of the total consideration paid. For
those SWVA shares that are converted into FNB shares, the number of
FNB shares issued will be determined by dividing $20.25 by the average
closing price of FNB's stock for the 30 trading days ending 10 days
prior to the closing of the merger, but in no case will FNB be
required to issue more than 1.324 shares or will SWVA be required to
accept less than 1.083 shares for each share of SWVA stock. FNB common
stock is listed on the Nasdaq National Market under the symbol FNBP.

The merger cannot be completed unless holders of at least two-thirds of
SWVA Bancshares common stock approve it. If approved, we anticipate the closing
of the merger will occur in early January of 2001.

The federal income tax consequences of the merger for you will depend on
whether you receive cash, stock, or a combination of both in exchange for your
SWVA shares.

This proxy statement/prospectus provides you with detailed information
about the proposed merger. We encourage you to read this entire document
carefully. SWVA's 2000 Annual Report to Stockholders is enclosed with this
proxy statement/prospectus.

Your board of directors has unanimously approved the merger and believes it
is in the best interest of SWVA and you, our shareholders. Accordingly, the
board unanimously recommends that you vote "FOR" the merger.

We hope you can attend the annual meeting. Whether or not you plan to
attend, please complete, sign and date the enclosed proxy card and return it
promptly in the enclosed envelope. If you do not return your card or vote in
person, the effect will be a vote against the approval of the merger. You can
revoke your proxy by writing to us at any time before the meeting or by
attending the meeting and voting in person.
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We look forward to seeing you at the meeting.

Sincerely,

_____________________________
B. L. Rakes, Chairman

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under this
proxy statement/prospectus or determined if this proxy statement/prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The securities to be issued by FNB in the merger are not savings or deposit
accounts or other obligations of any bank or non-bank subsidiary of either FNB
or SWVA, and they are not insured by the Federal Deposit Insurance Corporation
or any other governmental agency.

This proxy statement/prospectus is dated ___________, 2000 and is first
being mailed to shareholders on or about __________, 2000.
<PAGE>

This proxy statement/prospectus incorporates by reference important
business and financial information about FNB and SWVA that is not included
herein or delivered herewith. Such documents are available without charge upon
request from: FNB Corporation, 105 Arbor Drive, Christiansburg, VA 24068-0600,
(540) 382-4951, Attention: Secretary, as to FNB documents; SWVA Bancshares,
Inc., 302 Second Street, S.W., Roanoke, VA 24011-1597, (540) 343-0135,
Attention: Secretary, as to SWVA documents. In order to ensure timely delivery
of the documents, any request should be made by _________________, 2000. The
requested documents will be sent by first class mail within one business day of
the receipt of the request.
<PAGE>

[SWVA Letterhead]

Notice Of Annual Meeting Of Shareholders
To Be Held On December __, 2000

On December __, 2000, SWVA Bancshares, Inc. will hold the annual meeting of
shareholders at ____________________________________________________________.
The meeting will begin at [10:30 a.m. local time.]

Only shareholders of record at the close of business on October ___, 2000
may vote at the meeting or any adjournments or postponements that may take
place. The meeting is for the purpose of considering and acting upon:

. the election of two directors;

. the ratification of the appointment of Cherry Bekaert & Holland LLP as
independent auditors for the fiscal year ending June 30, 2001;

. the approval and adoption of the Agreement and Plan of Merger between
SWVA Bancshares, Inc. and FNB Corporation. A copy of which is enclosed
as Appendix A. Shareholders are entitled to assert dissenter's rights
under Article 15 of the Virginia Stock Corporation Act, a copy of
which is enclosed as Appendix C; and

. any other business properly brought before the meeting or any
adjournments or postponements thereof. The Board of Directors is not
aware of any other business to come before the meeting. Any action may
be taken on the foregoing proposals at the meeting on the date
specified above or on any date or dates to which the meeting may be
adjourned.

YOUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS MERGER PROPOSAL.

For information regarding the proposed merger, please review the proxy
statement/prospectus delivered with this notice which discusses in detail the
proposed merger.

By order of the Board of Directors,

____________________________________
Barbara C. Weddle, Secretary

Roanoke, Virginia
_________, 2000

REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
VOTE PROMPTLY BY DATING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS
EXERCISE IN THE MANNER PROVIDED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
<PAGE>

Table Of Contents

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Page
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Available Information................................................................................ 1

Incorporation of Certain Information By Reference.................................................... 2

Who Can Help Answer Your Questions................................................................... 3

Summary.............................................................................................. 4

Risk Factors.........................................................................................

Comparative Market Price Information.................................................................

Selected Historical Consolidated Financial Data......................................................

Selected Unaudited Pro Forma Combined Financial Data.................................................

Comparative Per Share Data...........................................................................

The Merger
Background of the Merger....................................................................
Reasons of SWVA for the Merger..............................................................
Accounting Treatment........................................................................
Federal Income Tax Consequences of the Merger...............................................
Rights of Dissenting Shareholders...........................................................

Opinion of SWVA's Financial Advisor
General.....................................................................................
Contribution Analysis.......................................................................
Analysis of Selected Publicly Traded Companies..............................................
Analysis of Comparable Acquisition Transactions.............................................
Discounted Dividend Analysis................................................................

Interests of Certain Persons in the Merger...........................................................
Indemnification.............................................................................
Management Following the Merger.............................................................
Extension of Employment Agreements..........................................................
Employee Benefit Plan.......................................................................

Differences in Rights of Shareholders................................................................

Terms of the Agreement and Plan of Merger
Conditions to the Merger....................................................................
Regulatory Approvals........................................................................
Waiver, Amendment and Termination...........................................................
Conduct of Business Pending the Merger......................................................
Expenses....................................................................................
Termination Fees............................................................................
Resales of FNB Common Stock.................................................................
</TABLE>

<PAGE>

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Election and Allocation of Consideration....................................................
Exchange of SWVA Stock......................................................................

Merger with CNB Holdings, Inc........................................................................

Acquisition of First Union Branches..................................................................

The Meeting..........................................................................................
SWVA Shareholder.....................................................................................
General.....................................................................................
Record Date; Voting Power...................................................................
Vote Required...............................................................................
Recommendation of the Board of Directors of SWVA............................................
Solicitation and Revocation of Proxies......................................................
Election of Directors.......................................................................
Ratification of Auditors....................................................................
Other Matters...............................................................................
Additional Information Regarding the Annual Meeting.........................................

The Companies
SWVA........................................................................................
FNB.........................................................................................

Description of FNB Capital Stock
Common Stock................................................................................
Listing of FNB Common Stock.................................................................

Differences in the Rights of FNB Shareholders and SWVA Shareholders
General.....................................................................................
Authorized Capital..........................................................................
Amendment of Articles of Incorporation and Bylaws...........................................
Mergers, Consolidations and Sales of Assets.................................................
Size and Classification of Board of Directors...............................................
Vacancies and Removal of Directors..........................................................
Director Liability and Indemnification......................................................
Special Meetings of Shareholders............................................................
Shareholder Nominations and Proposals.......................................................

Regulation
General.....................................................................................
FDIC Regulations............................................................................
Regulatory Capital Requirements.............................................................
Deposit Insurance...........................................................................
Federal Reserve System......................................................................
Office of Thrift Supervision................................................................

Experts..............................................................................................

Validity of FNB Common Stock.........................................................................

Shareholder Proposals................................................................................
</TABLE>

ii
<PAGE>

Appendices
----------

A. Agreement and Plan of Merger and the Plan of Merger between SWVA and FNB,
dated as of August 7, 2000.

B. Opinion of RP Financial

C. Article 15 of the Virginia Code.

iii
<PAGE>

Available Information

FNB and SWVA are both subject to the reporting and informational
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, and, in accordance therewith, file reports and other
information with the Securities and Exchange Commission. Such reports and other
information filed by FNB and SWVA with the Commission may be inspected and
copied at the principal office of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and may be inspected at the
Commission's Regional Offices at 7 World Trade Center, New York, New York 10048,
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Certain of such reports, proxy statements and other
information are also available from the Commission over the Internet at
http://www.sec.gov. In addition, FNB's common stock is traded on the NASDAQ
National Market System. Reports, proxy statements and other information
concerning FNB may be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

This Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement on Form S-4, of which this Proxy
Statement/Prospectus is a part, and the exhibits thereto, which has been filed
by FNB with the Commission under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, certain portions of which have been omitted
pursuant to the rules and regulations of the Commission and to which portions
reference is hereby made for further information. Statements contained in this
Proxy Statement/Prospectus concerning the provisions of certain documents filed
as exhibits to the Registration Statement are necessarily brief descriptions
thereof, and are not necessarily complete, and each such statement is qualified
in its entirety by reference to the full text of such document.

All information contained herein with respect to FNB and its subsidiaries
have been supplied by FNB, and all information with respect to SWVA and its
subsidiaries has been supplied by SWVA.

No person has been authorized to give any information or to make any
representation other than those contained in this Proxy Statement/Prospectus
and, if given or made, such information or representation should not be relied
upon as having been authorized by FNB or SWVA. Neither the delivery of this
Proxy Statement/Prospectus nor any distribution of the securities to which this
Proxy Statement/Prospectus relates shall, under any circumstances, create any
implication that there has been no change in the affairs of FNB, SWVA, or any of
their respective subsidiaries since the date hereof or that the information
contained herein is correct as of any time subsequent to its date. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, any securities other than the securities to which it
relates or an offer to sell or a solicitation of an offer to purchase the
securities offered by this Proxy Statement/Prospectus in any jurisdiction in
which such an offer or solicitation is not lawful.

1
<PAGE>

Incorporation Of Certain Information By Reference

The following documents filed by FNB with the Commission (File No. 000-
24141) under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated
by reference in this Proxy Statement/Prospectus: FNB's Annual Report on Form 10-
K as of and for the year ended December 31, 1999; the portions of FNB's Proxy
Statement for the Annual Meeting of shareholders held on May 9, 2000 that have
been incorporated by reference in the 1999 FNB 10-K; FNB's Quarterly Reports on
Form 10-Q for the three months ended March 31, 2000 and the six months ended
June 30, 2000; the description of FNB Common Stock set forth in FNB's
Registration Statement on Form S-4, Registration No. 333-02524, and any
amendment or report filed for the purpose of updating any such description; and
FNB's Current Reports on Form 8-K, dated April 25, 2000, July 13, 2000 and
August 15, 2000.

The following documents filed by SWVA with the Commission (File No. 000-
24674) under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated
by reference in this Proxy Statement/Prospectus: SWVA's Annual Report on Form
10-KSB as of and for the year ended June 30, 1999 including SWVA's 1999 Annual
Report to Stockholders, filed as Exhibit 23 to the Form 10-KSB.

All documents filed by FNB or SWVA pursuant to Section 13(a), 13(c), 14 or
15 of the Exchange Act subsequent to the date of this Proxy Statement/Prospectus
and prior to the Meeting are hereby incorporated by reference in this Proxy
Statement/Prospectus and shall be deemed a part hereof from the date of filing
of such document.

Any statement contained herein, in any supplement hereto or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the Registration Statement and this
Proxy Statement/Prospectus to the extent that a statement contained herein, in
any supplement hereto or in any other subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement, this Proxy Statement/Prospectus, or any supplement hereto.

This Proxy Statement/Prospectus contains or incorporates by reference
certain forward looking statements with respect to the financial condition,
results of operations and business of FNB and, assuming the consummation of the
merger, the proposed merger with CNB Holdings, Inc., a combined FNB/SWVA,
including statements relating to: (a) the cost savings and accretion to cash
earnings and reported earnings that will be realized from the merger and (b) the
impact of the mergers on revenues, including the potential for enhanced
revenues. These forward-looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by such forward looking statements include, among others, the
following possibilities: (1) expected cost savings from the mergers cannot be
fully realized or realized within the expected time frame; (2) costs or
difficulties related to the integration of the businesses of SWVA and CNB
Holdings, Inc. with FNB, are greater than expected; (3) revenues following the
mergers are lower than expected; (4) competitive pressure among depository
institutions increases significantly; (5) changes in the interest rate
environment reduce interest margins; (6) general economic conditions, either
nationally or in Virginia in which the combined company will be doing business,
are less favorable than expected; or (7) legislation or regulatory changes
adversely affect the businesses in which the combined company would be engaged.

2
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Who Can Help Answer Your Questions

If you want additional copies of this document, of if want to ask any questions
about the merger, you should contact Barbara C. Weddle, SWVA Bancshares, Inc.,
302 Second Street, S.W., Roanoke, Virginia 24011-1597, (540) 983-1410.

3
<PAGE>

Summary

This summary highlights selected information from this proxy
statement/prospectus. It may not contain all of the information that is
important to you. To better understand the merger of FNB Corporation and SWVA
Bancshares, Inc., and for a more complete description of the merger and related
transactions, we urge you to read this entire document carefully, including the
appendices. Each item in this summary includes a page reference directing you
to a more complete description of the item.

The Merger (page ___)

The Boards of FNB and SWVA have unanimously agreed to a merger of their two
bank holding companies. SWVA will be merged into FNB and FNB will survive. The
officers and employees of Southwest Virginia Savings Bank, FSB will not change
as a result of the merger. After the merger is completed, Southwest Virginia
Savings Bank, FSB will continue to serve you as before but will be a wholly-
owned subsidiary of FNB.

SWVA shareholders must approve the merger as a condition to the merger
becoming effective.

What Shareholders of SWVA Will Receive in the Merger (page _____)

In the merger, shareholders of SWVA will have the option to elect to
receive either cash or FNB common stock in exchange for each of their SWVA
shares, subject to certain limitations discussed below. Shareholders of SWVA may
elect to exchange some of their shares for cash and some for stock.

Following the merger, current FNB shareholders will own approximately 91.3%
of the combined company and current SWVA shareholders will own approximately
8.7% of the combined company. If the FNB and SWVA merger occurs and the
proposed merger of CNB Holdings, Inc. into FNB as described in "Additional
Acquisition" on page ___ also occurs, current FNB shareholders will own
approximately 85.6% of the combined company and current SWVA shareholders will
own approximately 8.2% of the combined company.

In exchange for each share of SWVA common stock held, SWVA shareholders
will receive either $20.25 in cash or shares of FNB common stock, whose
aggregate market value equals $20.25, provided that in no event will FNB be
required to issue more than 1.324 shares or will SWVA be required to accept less
than 1.083 shares for each outstanding share of SWVA common stock. The ratio of
shares of FNB common stock that will be exchanged for each outstanding share of
SWVA common stock is the "exchange ratio." The elections for cash or stock by
the SWVA shareholders will be subject to the limitation that the aggregate
amount of cash to be distributed to SWVA shareholders in the merger will equal
$1,785,742.00 (plus any cash paid in lieu of fractional shares) or approximately
20% of the total consideration paid. FNB has the right to change this amount to
more closely follow the actual elections of SWVA shareholders as long as the
change in the aggregate amount of cash consideration does not affect the desired
tax treatment of the merger.

The exchange ratio may vary depending on the average closing price of FNB
common stock over the 30 trading day period ending 10 days prior to the closing
of the merger. For a discussion of the potential effect of fluctuations in the
market price of FNB on the exchange ratio, see Risk Factors on page ___.

4
<PAGE>

Allocation of Cash and Stock Consideration (page __)

As a result of the limitation on the aggregate amount of cash consideration
described above and the tax treatment provisions described under "Election and
Allocation of Consideration" beginning on page ___, the amount of cash and stock
received by shareholders may differ from their actual elections. If FNB common
stock is over-subscribed by the shareholders of SWVA, a shareholder that elected
FNB common stock may receive part of his or her consideration in cash. If cash
is over-subscribed by the shareholders of SWVA, a shareholder that elected cash
may receive part of his or her consideration in the form of FNB common stock.

Fractional Shares (page ____)

Shareholders will receive cash in lieu of any fractional share of FNB
common stock to be received in the merger, based upon the market value of FNB
common stock used to determine the exchange ratio.

Shareholders should not send in their common stock certificates until they
receive further instructions.

The Companies (page _____)

FNB Corporation SWVA Bancshares, Inc.
105 Arbor Drive 302 2nd Street, S.W.
Christiansburg, Virginia 24068 Roanoke, Virginia 24011
(540) 382-6041 (540) 983-1405

FNB

FNB is a Virginia bank holding company formed in 1996. FNB's wholly-owned
subsidiary, First National Bank, offers a full array of banking services through
twelve retail offices located in Montgomery, Pulaski and Wythe counties and the
towns of Blacksburg, Christiansburg, Wytheville and Pulaski and the city of
Radford, Virginia. First National Bank, which was organized in 1905, serves the
commercial, business, agricultural, and personal banking needs of its market
area, commonly referred to as the New River Valley.

SWVA

SWVA Bancshares, Inc. headquartered in Roanoke, Virginia, is a unitary
thrift holding company that commenced operations in June 1994, while its wholly
owned subsidiary, Southwest Virginia Savings Bank, FSB, began operations in
1927. Southwest Virginia Savings Bank, FSB has five retail offices through which
it operates by attracting deposits from the general public and using deposit
funds to make commercial, consumer, and residential construction and permanent
mortgage real estate loans. In addition, it has one loan production office.

The Meeting (page ____)

SWVA will hold its annual meeting of shareholders at [10:30 a.m.], on
December ___, 2000 at ____________________________________________, Roanoke,
Virginia.

5
<PAGE>

Shareholders of SWVA will be asked to approve and adopt the merger
agreement at the annual meeting. Shareholders will also be asked to elect two
directors and ratify the appointment of independent auditors.

Approval and adoption of the merger agreement will require the affirmative
vote of at least two-thirds of the outstanding shares of SWVA common stock.

You will have one vote for each share of SWVA common stock held on October
___, 2000.

Recommendations of the Board of Directors of SWVA (page ____)

The SWVA Board of Directors, by unanimous vote, has approved and adopted
the merger agreement, believes the merger is fair and in the best interests of
SWVA and the SWVA shareholders, and recommends that SWVA shareholders vote
"FOR," the approval and adoption of the merger agreement.

Dividends (page ___)

FNB has regularly paid cash dividends. The merger agreement does not
restrict FNB's or SWVA's ability to declare or pay regular periodic cash
dividends consistent with past practice through the closing of the merger.

The current annual dividend for FNB is $.18 per share. Following the
merger, FNB intends to maintain its annual dividend at its current level. The
FNB Board of Directors, however, will use its discretion to decide whether and
when to declare dividends and in what amount.

Management Following the Merger (page _____)

The directors, officers and employees of Southwest Virginia Savings Bank,
FSB will not change as a result of the merger except that J. Daniel Hardy, Jr.,
President and Chief Executive Officer of FNB, shall be appointed to the Board of
Directors of Southwest Virginia Savings Bank, FSB. B. L. Rakes and F. Courtney
Hoge, directors of SWVA, will be appointed to the Board of Directors of FNB. At
the next annual meeting of shareholders of FNB, management of FNB has agreed to
recommend to its shareholders that Mr. Rakes and Mr. Hoge be elected to the
Board of Directors of FNB.

Material Federal Income Tax Consequences of the Merger (page _____)

Neither FNB nor SWVA will recognize gain or loss as a result of the merger.
SWVA shareholders will not recognize gain or loss by exchanging their SWVA
shares for shares of FNB common stock. In general, however, SWVA shareholders
will recognize taxable gain for any cash they receive in the merger in exchange
for shares of SWVA stock or in lieu of fractional shares.

Terms of the Agreement and Plan of Merger (page ____)

The merger agreement, as amended and restated, is attached as Appendix A to
this proxy statement/prospectus. You are encouraged you to read the merger
agreement in its entirety.

6
<PAGE>

Conditions to the Merger (page ____)

The completion of the merger is subject to a number of conditions that must
be completed or waived before the closing, including:

. approval by the holders of at least 2/3 of the outstanding shares of
common stock of SWVA;

. receipt by FNB and SWVA of an opinion of counsel that the merger will be
treated as a reorganization under the Internal Revenue Code and that no
gain or loss will be recognized by shareholders of SWVA to the extent
they receive FNB common stock;

. approval by the Federal Reserve Board and any other regulatory authority
whose approval is required for consummation of the merger and such
approvals shall not have imposed any condition or requirement which
would so materially adversely impact the economic or business benefits
of the merger;

. each company's performance in all material respects of its obligations
under the merger agreement;

. each company's representations and warranties contained in the merger
agreement being, and continuing to be, true and correct in all material
respects; and

. no injunction that prohibits the merger.

Termination of the Merger (page _____)

The merger agreement allows for termination of the agreement for a number
of reasons, including:

. by mutual consent of FNB and SWVA;

. by either company if the closing does not occur on or before June 1,
2001;

. by either company if the required SWVA shareholder approval is not
obtained;

. by either company if other conditions to the merger have not been met or
waived;

. by either company based on an uncured material breach of the other;

. by SWVA if the average closing price of FNB's stock over the 30 trading
day period ending 10 days prior to the closing of the merger is less
than $14.00, unless FNB agrees to increase the exchange ratio to what it
would be if the average closing price were equal to $14.00, so that the
SWVA shareholders would receive 1.324 shares of FNB stock for each share
of SWVA stock;

7
<PAGE>

1.083 shares of FNB stock for each share of SWVA stock, provided,
however, that if FNB has entered into a merger agreement under which it
would be the acquired entity, then FNB could not terminate its
acquisition of SWVA based on a greater than $20.00 average closing
price and the exchange ratio would be set at 1.083; or

. by FNB due to the occurrence of a Termination Event, as described
below.

Termination Fees (page ___)

If either company terminates the merger agreement because of the other
company's material breach or failure to comply with its obligations under the
merger agreement, such company will be reimbursed by the other for its costs and
expenses.

SWVA has agreed to pay FNB a termination fee of $250,000.00 within five
business days after written notice of FNB's termination of the merger agreement
because of any of the following "Termination Events:"

. SWVA, without having received FNB's prior written consent, enters into
an agreement to be acquired by someone other than FNB or such other
person acquires directly from SWVA securities representing 10% or more
of the outstanding common stock of SWVA; or

. another person acquires beneficial ownership or a right to acquire
beneficial ownership of 20% or more of the outstanding common stock of
SWVA; or

. another person makes a bona fide proposal to SWVA by public announcement
or written communication that becomes the subject of public disclosure
to acquire SWVA by merger, share exchange or other similar transactions
and following such announcement the merger agreement with FNB fails to
receive the required approval of the SWVA shareholders.

Regulatory Approvals (page ____)

FNB and SWVA must receive the approval of the Board of Governors of the
Federal Reserve System before the merger can be complete.

Interest of Certain Persons in the Merger (page ______)

On the effective date of the merger, the existing employment agreements for
D. W. Shilling, the president and chief executive officer of Southwest Virginia
Savings Bank, FSB, and Barbara Weddle, Senior Vice President of the Bank, will
be amended to extend such employment agreements for 36 months and 12 months,
respectively, from the effective date of the merger. On the effective date of
the merger, FNB will also enter into an agreement with B. L. Rakes in which FNB
will agree to pay Mr. Rakes $17,000 in consideration for his agreement not to
compete with FNB and its affiliates for a period of one year. In addition, under
the merger agreement, all awards made to officers and directors under SWVA's
stock option plans will be converted into and become options to acquire FNB
common stock.

Accounting Treatment (page _____)

8
<PAGE>

The merger will be accounted for under the purchase method of accounting.

Listing of FNB Common Stock (page ____)

FNB common stock trades on the NASDAQ National Market System under the
symbol "FNBP."

Opinions of Financial Advisor (page ____)

SWVA's financial advisor, RP Financial, has given an opinion to the SWVA
Board of Directors as of _________________, that, based on its analysis, the
consideration to be paid to the SWVA shareholders is fair to SWVA from a
financial point of view. The opinion is attached as Appendix B to this proxy
statement/prospectus.

Dissenter's Rights (page ____)

Each holder of SWVA common stock who dissents from the merger is entitled
to the rights and remedies of dissenting shareholders as provided in Article 15
of the Code of Virginia, subject to compliance with the procedures set forth in
the article. A copy of Article 15 of the Code of Virginia is attached as
Appendix C to this proxy statement/prospectus.

Additional Acquisition (page ___)

On July 10, 2000, FNB entered into an Agreement and Plan of Merger with CNB
Holdings, Inc., the parent of Community National Bank in Pulaski, Virginia. The
Boards of Directors of both companies have each approved the agreement. The
merger is subject to the approval of the shareholders of CNB Holdings, Inc. and
appropriate regulatory agencies, and other standard conditions for transactions
of this nature and is expected to close in the first quarter of 2001.

Risk Factors

Shareholders of FNB and SWVA should consider carefully all the information
contained in this proxy statement/prospectus, including the following:

Effects of Fluctuations in Trading Price of FNB Common Stock

The merger agreement provides that SWVA shareholders, subject to the
limitation on the amount of cash consideration, may elect to receive for each
share of SWVA common stock either cash in the amount of $20.25 or FNB common
stock equal to $20.25 based upon an exchange ratio, provided that FNB will not
be required to issue more than 1.324 shares of FNB common stock for each share
of SWVA common stock and SWVA shareholders will not be required to accept less
than 1.083 shares of FNB common stock for each share of SWVA common stock.

The exchange ratio relating to the SWVA shareholders' stock election in the
merger will be determined using the average closing price of FNB common stock
over a 30 day trading period ending 10 business days before the closing of the
merger. Accordingly, it is possible that the value within the permitted range
of values of merger consideration at the time the merger is effective for a SWVA
shareholder receiving FNB common stock will be higher or lower than $20.25 per
share depending on the direction of the price movement of FNB common stock after

9
<PAGE>

the exchange ratio is calculated. There can be no assurance that following the
merger the price of FNB common stock will not decline from the market price used
in calculating the exchange ratio.

Cash and/or Stock Paid in the Merger May be Different From What Shareholders
Elect

SWVA shareholders making elections for cash or stock may not receive the
type of consideration they elect for the following reasons. The aggregate amount
of cash FNB will pay in exchange for SWVA common stock in the merger is fixed.
If the FNB common stock election is over-subscribed by SWVA shareholders, a
shareholder that elected FNB common stock may receive part of his or her
consideration in the form of cash. If the cash election is over-subscribed by
SWVA shareholders, a shareholder that elected cash may receive part of his or
her consideration in the form of FNB common stock.

Although FNB may reallocate the amount of cash and shares of FNB common
stock to more closely follow the actual elections of shareholders, the
reallocation amounts may be insufficient to follow shareholders' actual
elections exactly. FNB may not reallocate the amount of cash or increase the
number of shares issued if such reallocation would interfere with the desired
tax treatment of the merger.

Comparative Market Price Information

FNB

The FNB shares are listed for trading on the NASDAQ National Market System
under the symbol "FNBP". The following table sets forth, for the fiscal quarters
indicated, the dividends paid and the high and low sales prices of FNB shares as
reported under the NASDAQ Composite Transactions Reports in The Wall Street
Journal.

<TABLE>
<CAPTION>
FNB
--------------------------------------------------
High Low Dividend
---- --- --------
<S> <C> <C> <C>
2000
First Quarter................................ $21.500 15.000 0.17
Second Quarter............................... 18.375 14.500 0.17
1999
First Quarter................................ 22.270 19.350 0.15
Second Quarter............................... 21.820 18.180 0.15
Third Quarter................................ 23.000 20.460 0.16
Fourth Quarter............................... 22.500 17.000 0.17
1998
First Quarter................................ 22.950 20.000 0.14
Second Quarter............................... 24.550 21.820 0.14
Third Quarter................................ 26.140 20.660 0.14
Fourth Quarter............................... 22.730 21.030 0.16
1997
First Quarter................................ 18.390 16.530 ---
Second Quarter............................... 17.350 16.320 0.08
Third Quarter................................ 19.010 16.530 0.13
Fourth Quarter............................... 19.630 17.770 0.14
</TABLE>

Both the trading values and per share dividends above have been adjusted
to retroactively reflect the effect of a 10% stock dividend in both 1999 and
1998 and a 2 for 1 stock split effected in the form of a 100% stock dividend
in 1997.
10
<PAGE>

SWVA

The SWVA shares are traded over-the-counter with prices reported on the OTC
Bulletin Board under the symbol SWVB. The following table sets forth, for the
fiscal quarters indicated, the dividends paid and the high and low sales prices
of SWVA shares as furnished by Wheat First Union, Roanoke, Virginia.

<TABLE>
<CAPTION>
SWVA
---------------------------------------------------
High Low Dividend
---- --- --------
<S> <C> <C> <C>
2000
First Quarter................................ $ 12.000 9.130 0.20
Second Quarter............................... 10.500 9.130 --
1999
First Quarter................................ 16.030 13.500 0.20
Second Quarter............................... 15.500 13.000 --
Third Quarter................................ 14.500 12.750 0.20
Fourth Quarter............................... 12.750 11.250 --
1998
First Quarter................................ 21.030 19.750 0.15
Second Quarter............................... 21.000 20.250 --
Third Quarter................................ 20.380 15.500 0.20
Fourth Quarter............................... 17.250 10.000 --
1997
First Quarter................................ 17.250 14.500 0.15
Second Quarter............................... 17.000 15.000 --
Third Quarter................................ 21.000 16.000 1.15
Fourth Quarter............................... 21.000 19.000 --
</TABLE>

Selected Historical Consolidated Financial Data

FNB and SWVA are providing the following financial information to aid you
in your analysis of the financial aspects of the mergers. This information is
only a summary and you should read it in conjunction with the historical
consolidated financial statements of FNB and SWVA and the related notes
contained in Annual Reports on Forms 10-K and 10-KSB and Quarterly Reports on
Forms 10-Q and 10-QSB that FNB and SWVA have previously filed with the
Securities and Exchange Commission. See "Available Information" on page 1.

The Selected Historical Consolidated Financial Data for FNB as of and for
the six months ended June 30, 2000 and 1999 have not been audited, but in the
opinion of management contain all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the financial
condition and results of operations for such periods.

The results of operations for the six month period ended June 30, 2000 are
not necessarily indicative of the results to be expected for the remainder of
the year or any other period.

11
<PAGE>

Selected Historical Consolidated Financial Data for FNB

<TABLE>
<CAPTION>
For the Six Months
Ended June 30, For the Year Ended December 31,
--------------------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(Unaudited) (Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY:
Interest income $ 20,378 18,011 37,563 34,931 32,402 29,935 27,884
Interest expense 9,681 8,482 17,610 17,249 16,764 15,016 14,081
Noninterest income 1,706 1,920 3,729 3,436 2,707 2,460 2,315
Noninterest expense 7,324 6,786 13,964 12,395 11,306 10,089 9,695
Net income 3,326 3,125 6,327 5,931 5,165 5,204 4,674

SHARE DATA:
Weighted average common
shares outstanding:
Basic 3,999,714 3,976,371 3,982,147 3,959,084 3,917,654 3,878,209 3,827,075
Fully diluted 3,999,976 3,976,371 3,982,147 3,959,084 3,917,654 3,878,209 3,827,075
Net income per common
share:
Basic $ 0.83 0.79 1.59 1.50 1.32 1.34 1.23
Fully Diluted 0.83 0.79 1.59 1.50 1.32 1.34 1.23
Cash dividends per common
share 0.34 0.31 .63 .57 .35 .50 .45

BALANCE SHEET SUMMARY:
Loans, net $ 393,327 358,951 377,099 323,959 286,767 269,145 248,305
Total assets 520,783 501,870 516,906 461,916 428,174 395,324 360,533
Total deposits 421,702 397,834 398,871 386,257 352,545 335,402 315,777
Total stockholders' equity 49,900 45,850 47,579 44,401 40,213 35,828 32,191

PERFORMANCE RATIOS:
Return on average assets
(1) 1.30 1.33 1.30 1.34 1.26 1.41 1.38

Return on average
stockholders' equity (1) 13.71 13.81 13.75 14.00 13.59 15.20 15.64

Dividend payout ratio 40.89 39.33 39.89 38.44 26.08 36.99 37.27
Average equity to average
assets 9.47 9.60 9.44 9.60 9.31 9.26 8.82
</TABLE>

(1) Data provided for the six months ended June 30, 2000 and 1999 shown on an
annualized basis.

NOTES: (A) All share and per share data have been adjusted retroactively to
reflect a 2 for 1 stock split effected in the form of a 100% stock
dividend in 1997 and 10% stock dividends in 1998 and 1999.

(B) Certain historical amounts have been reclassified to conform to the
presentation applicable to the most current periods.

12
<PAGE>

Selected Historical Consolidated Financial Data For SWVA

<TABLE>
<CAPTION>
For the Year Ended June 30,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
(Dollars in thousands, except per share data)
<S>
EARNINGS SUMMARY: <C> <C> <C> <C> <C>
Interest income $ 6,028 5,791 5,808 5,310 4,906
Interest expense 3,313 3,338 3,226 2,673 2,622
Noninterest income 467 575 428 398 455
Noninterest expense 2,586 2,493 2,198 2,392 2,242
Net income 396 345 461 414 306

SHARE DATA:
Weighted average common
shares outstanding:
Basic 400,793 444,381 477,057 486,366 509,744
Fully Diluted 400,793 444,381 486,812 486,366 509,837
Net income per common
share:
Basic $ .99 .78 .97 .85 .60
Fully Diluted .99 .78 .95 .85 .60
Cash dividends
per common share .40 .40 1.30 .30 .30

BALANCE SHEET SUMMARY:
Loans, net $ 53,610 45,576 48,211 50,982 46,757
Total assets 83,961 81,714 84,387 70,753 66,987
Total deposits 64,748 62,094 68,288 57,933 57,643
Total stockholders'
equity 6,742 6,791 8,327 8,602 8,675

PERFORMANCE RATIOS:
Return on average
assets 0.48 0.42 0.59 0.60 0.46
Return on average
stockholders' equity 5.96 4.41 5.41 4.87 3.50
Dividend payout 49.00 51.00 134.00 35.00 50.00
Average equity to
average assets 8.03 9.43 10.98 12.26 13.08
</TABLE>

Selected Unaudited Pro Forma Combined Financial Data

The following selected unaudited pro forma combined financial data gives
effect to the merger as though the merger had occurred on June 30, 2000 in the
case of balance sheet related data and on January 1, 1999 in the case of income
statement related data. The pro forma adjustments are based upon available
information and assumptions that management believes are reasonable. The
selected unaudited pro forma combined financial

13
<PAGE>

data are presented for illustrative purposes only and are not necessarily
indicative of the operating results or financial condition of the combined
company that would have occurred had the mergers occurred at the beginning of
the periods presented, nor are the selected unaudited pro forma combined
financial data necessarily indicative of future operating results or financial
position of the combined company.

The unaudited pro forma data in the tables assumes that the merger is
accounted for using the purchase method of accounting (see "Accounting
Treatment"). The data do not take into consideration any operating efficiencies
that may be realized as a result of the merger.

The selected unaudited pro forma combined financial data should be read in
conjunction with the consolidated financial statements of FNB and SWVA
incorporated by reference in this proxy statement/prospectus. The information
presented herein is based on, and is qualified in its entirety by, the
historical financial statements, including the notes thereto, of FNB and SWVA
incorporated by reference herein. See "Available Information," and
"Incorporation of Certain Information by Reference."

FNB uses a calendar year-end for financial reporting purposes, while SWVA
uses a June 30 fiscal year-end. In order to enhance the comparability of this
unaudited pro forma combined financial data, the historical SWVA financial
information upon which this pro forma data is based was converted to a calendar
year basis.

<TABLE>
<CAPTION>
As of
SELECTED PRO FORMA COMBINED June 30, 2000
BALANCE SHEET DATA ----------------
(in thousands)
<S> <C>
Total assets $ 606,622
Loans, net of allowance for loan losses 447,066
Total deposits 485,867
Stockholders' equity 56,739
</TABLE>

<TABLE>
<CAPTION>
Year Ended Six Months
SELECTED PRO FORMA COMBINED December 31, Ended
STATEMENT OF INCOME DATA 1999 June 30, 2000
(in thousands except share data) -------------- --------------
<S> <C> <C>
Interest income $ 43,304 $ 23,431
Interest expense 21,483 11,515
Noninterest income 4,221 1,914
Noninterest expense 16,585 8,709
Net income 6,154 3,354

Weighted average common shares outstanding
for:
Basic earnings per share 4,364,301 4,381,868

Fully diluted earnings per share 4,377,299 4,395,128
</TABLE>

14
<PAGE>

Year Ended Six Months
PRO FORMA COMBINED PER December 31, Ended
COMMON SHARE DATA (1) 1999 June 30, 2000
--------------------- ----------------------
<S> <C> <C>
Basic earnings per common share $ 1.41 $ 0.77
Fully diluted earnings per common share $ 1.41 $ 0.76
Cash dividends declared $ 0.63 0.34
Book value at June 30, 2000 $ 12.94

SELECTED PRO FORMA COMBINED FINANCIAL RATIOS (1)
Return on average assets (June 30, 2000 1.08% 1.12%
annualized)
Return on average stockholders' 11.75% 12.14%
equity (June 30, 2000 annualized)
Average stockholders' equity to 9.25%
average total assets at June 30, 2000
</TABLE>

(1) Per Common Share Data and Selected Financial Ratios are presented for the
year and six months ended December 31, 1999 and June 30, 2000, respectively, for
information related to pro forma combined income statement data. Such
information is presented only as of June 30, 2000 to the extent related to pro
forma combined balance sheet data.

Comparative Per Share Data

The following table sets forth certain historical, pro forma and pro forma
equivalent per share financial information for the common stock of FNB and SWVA
. The pro forma and pro forma equivalent per share information gives effect to
the merger as if the merger had been effective on the dates presented, in the
case of the book value data, and as if the merger had become effective January
1, 1999, in the case of the net income and dividends declared data presented.
The pro forma data in the tables assumes that the merger is accounted for using
the purchase method of accounting. See "Accounting Treatment." The information
presented herein is based on, and is qualified in its entirety by, the
historical financial statements, including the notes thereto, of FNB and SWVA
incorporated by reference herein, and should be read in conjunction therewith.
See "Available Information," and "Incorporation of Certain Information by
Reference." The pro forma and equivalent pro forma per share data in the
following table is presented for comparative purposes only and are not
necessarily indicative of what the combined financial position or results of
operations would have been had the merger been consummated during the periods or
as of the date for which such pro forma information is presented.

15
<PAGE>

(5) PER
FNB SWVA PRO FORMA EQUIVALENT
HISTORICAL HISTORICAL COMBINED SWVA
SHARE(1)
---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
NET INCOME FOR THE YEAR ENDED
DECEMBER 31, 1999
Basic $ 1.59 $ 0.92 $ 1.41 (2) $ 1.68
Fully diluted
1.59 0.92 1.41 (2) 1.68

NET INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 2000
Basic 0.83 0.41 0.77 (2) 0.92
Fully diluted
0.83 0.41 0.76 (2) 0.91

CASH DIVIDENDS DECLARED PER
SHARE
For the year ended 0.63 -- 0.63 (3) 0.75
December 31, 1999:
For the six months
ended June 30, 2000:
0.34 -- 0.34 (3) 0.40

BOOK VALUE PER SHARE
As of December 31, 1999 11.93 16.34 -- --
As of June 30, 2000
12.47 16.63 12.94 (4) 15.41
</TABLE>

(1) Per equivalent SWVA share amounts are calculated by multiplying the pro
forma combined amounts by the Exchange Ratio of 1.191.

(2) The pro forma net income per share amounts are calculated by totaling the
historical net income of FNB and SWVA (as adjusted per Note 5 below),
adjusting the result to give effect to the merger as though it had occurred
on January 1, 1999, and dividing it by pro forma average basic and fully
diluted shares. To arrive at pro forma shares, FNB's historical average
shares outstanding were added to the incremental shares that would be
issued, assuming a 1.191 Exchange Ratio, in exchange for 80% of the
historical SWVA shares outstanding. The pro forma net income per share
amounts do not take into consideration any operating efficiencies that may
be realized as a result of the merger.

(3) Pro forma cash dividends represents the FNB historical amounts.

(4) Pro forma book value per share amounts are calculated by dividing pro forma
combined stockholders' equity by pro forma common shares outstanding at the
end of the period. Pro forma stockholders' equity gives effect to the merger
as though it had occurred on June 30, 2000. To arrive at pro forma shares
outstanding, FNB's historical shares outstanding at June 30, 2000 were added
to the incremental shares that would be issued assuming the merger occurred
at June 30, 2000, using a 1.191 Exchange Ratio, in exchange for 80% of the
historical SWVA shares outstanding at that date. Pro forma shares
outstanding do not include unearned shares held by Employee Stock Ownership
Plans sponsored by FNB and SWVA.

16
<PAGE>

(5) FNB uses a calendar year-end for financial reporting purposes, while SWVA
uses a June 30 fiscal year-end. In order to enhance the comparability of
this per share data, the historical SWVA financial information was converted
to a calendar year basis.

Following the consummation of the merger, SWVA shares will cease to be
outstanding.

The Merger

The following information describes information pertaining to the merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the appendices hereto, including the Agreement and Plan
of Merger, which is attached as Appendix A and is incorporated herein by
reference. All shareholders are urged to read the appendices in their entirety.

Background of the Merger

In connection with its normal strategic planning process, SWVA
continuously reviewed its strategic business alternatives, devoting particular
attention to the continuing consolidation and increasing competition in the
banking and financial services industries in the Southeast U.S. regional market.
In early 2000, the SWVA Board sought to reevaluate the strategic alternatives
available, in view of the rapidly changing nature of banking and competitive
forces. SWVA engaged RP Financial in April 2000 to conduct a third party
evaluation of the strategic alternatives available to SWVA, including strategies
currently being pursued by SWVA under its business plan, with a particular focus
on shareholder value.

On April 20, 2000, RP Financial presented to SWVA's Board the results of
its analysis, including an overview of the market for bank and thrift mergers,
an assessment of SWVA's then current strategic business plan, identification of
alternative strategies and an assessment of the range of potential value were
SWVA to pursue a strategic merger. Such evaluation indicated that a strategic
merger could possibly generate a higher return for shareholders than operating
independently, based on an analysis of comparable transactions. The SWVA Board
also reviewed RP Financial's analysis pertaining to SWVA as an acquisition
target by eleven regional financial institutions who were considered to be
viable potential strategic merger partners, including FNB. In view of the
potentially greater value to shareholders from a potential strategic merger, the
SWVA Board authorized RP Financial to contact five regional financial
institutions which appeared to have both the interest in a strategic merger with
SWVA and the highest ability to pay a price which would be considered fair from
a financial point of view ("Potential Merger Partners").

During mid-May 2000, at the direction of the SWVA Board, RP Financial
commenced the process of contacting the Potential Merger Partners to determine
the nature of their interest, if any, in a strategic merger with SWVA. One of
the Potential Merger Partners elected not to execute a confidentiality
agreement. After executing confidentiality agreements, the four remaining
Potential Merger Partners each received a binder of financial and other
information concerning SWVA and was asked to provide a non-binding expression of
interest. Two of the Potential Merger Partners, including FNB, submitted
expressions of interest.

On June 8, 2000, RP Financial met with the SWVA Board to review the
expressions of interest. Based on that meeting, the SWVA Board elected to
request revised expressions of interest, on both a price and transaction
structure basis. RP Financial met with the SWVA Board

17
<PAGE>

on June 20, 2000 to review the revised expressions of interest. Among the
factors considered in evaluating each offer were the form and amount of
consideration, the potential for price appreciation of the common stocks of the
Potential Merger Partners, the amount of dividends, the pro forma return on
equity and return on assets of the Potential Merger Partners after merging with
SWVA, and the anticipated aftermarket liquidity of the shares. After consulting
with representatives of RP Financial and counsel, the SWVA Board elected to
pursue additional negotiations with FNB in order to determine if a definitive
agreement could be reached.

During July 2000, senior management and the financial advisors of each of
SWVA and FNB continued to discuss the financial and other terms of the proposed
Merger, including the form and amount of consideration to be offered, the
treatment of SWVA stock options, the termination provisions, and issues relating
to the management and operations of SWVA following the Merger. During this
period, SWVA, FNB, and their respective legal counsel and financial advisors
conducted reciprocal due diligence analyses. During this period, the form and
amount of consideration was determined on the basis of arms-length-negotiations
between SWVA representatives, the FNB representatives and the financial
advisors.

On August 7, 2000, at a meeting of the SWVA Board, the SWVA Board
reviewed the reasons for, and the potential benefits of the Merger; SWVA's legal
counsel reviewed the terms of the Agreement and Plan of Merger, related
agreements and the transactions contemplated thereby; and RP Financial made a
presentation regarding the financial terms of the Agreement and Plan of Merger
and the fairness, from a financial point of view, of the cash consideration and
the Exchange Ratio for the stock consideration to holders of SWVA Common Stock.
After a thorough discussion and consideration of the factors discussed below
under "Reasons of SWVA for the Merger", the SWVA Board unanimously approved the
Agreement and Plan of Merger and the transactions contemplated thereby, and
authorized the execution of the Agreement and Plan of Merger. The Agreement and
Plan of Merger was entered into later in the day on August 7, 2000.

Reasons of SWVA for the Merger

In determining to approve the merger agreement and the transactions
contemplated therein and to recommend its approval to the SWVA shareholders, the
SWVA Board reviewed and considered a number of factors, including, without
limitation, the following:

. the financial condition, results of operations, cash flow, business
and prospects of SWVA and FNB;

. the operating environment for SWVA, including, but not limited to, the
continued consolidation and increasing competition in the banking and
financial services industries and the prospect for further changes in
the industry;

. SWVA's ability to achieve greater operational scale and increase its
financial resources to enable substantial investments in technology
and increase SWVA's return on equity, which are necessary to remain
competitive in the long-term;

. the SWVA Board's belief that the merger is attractive in that the
merger allows SWVA shareholders to become shareholders of a larger,
more diversified institution;

. while no assurances can be given, the anticipated cost savings,
operating efficiencies and enhanced revenue opportunities available to
the combined company from the

18
<PAGE>

merger, including, without limitation, revenue enhancements driven by a broader
array of products and repricing initiatives;

. that FNB has consistently paid dividends to its shareholders;

. the SWVA Board's assessment that the combined company resulting from the
merger would better serve the convenience and needs of its customers and
the communities it serves as a result of being affiliated with a larger
bank holding company (as compared to SWVA remaining independent),
thereby affording access to greater financial, managerial and
technological resources and an ability to offer an expanded range of
products and services;

. the financial presentation and opinion of RP Financial rendered to the
SWVA Board as to the fairness, from a financial point of view, of the
exchange ratio to holders of SWVA Common Stock (see " -- Opinion of
SWVA's Financial Adviser").

In reaching its determination to approve and recommend the merger, the SWVA
Board did not assign any relative or specific weights to the various factors
considered by it, and individual directors may have given differing weights to
different factors. The foregoing discussion of the information and factors
considered by the SWVA Board is not intended to be exhaustive but is believed to
include all material factors considered by the SWVA Board.

Based on the foregoing, the SWVA Board believes that the merger is in the
best interests of SWVA and its shareholders and unanimously recommends that SWVA
shareholders vote "FOR" approval of the merger agreement.

Accounting Treatment

The merger will be accounted for by FNB under the purchase method of
accounting for financial reporting purposes in accordance with Accounting
Principles Board Opinion No. 16, "Business Combinations," as amended. Under this
method of accounting, the purchase price will be allocated to assets acquired
and liabilities assumed based on their fair values at the date of the
acquisition. Any excess of purchase price over the net fair values of assets
acquired and liabilities assumed will be recorded as goodwill. However, based on
the assumptions incorporated in the pro forma financial information included
herein, which reflect purchase accounting adjustments that assume an effective
date of the merger of June 30, 2000, it is not expected that a significant
amount of goodwill will result from the transaction. The income statement of the
combined company will not include the operations of SWVA prior to the effective
date of the merger.

Federal Income Tax Consequences of the Merger

The following is a discussion of certain material federal income tax
consequences of the merger under the Internal Revenue Code of 1986, as amended.

SWVA Shareholders Who Receive Solely FNB Common Stock. SWVA shareholders
who exchange their stock solely for shares of FNB common stock in the merger
will not recognize any gain or loss on that exchange, except to the extent cash
in lieu of fractional shares is received, which should be treated as proceeds
from the sale of fractional shares. The aggregate adjusted tax basis of the
shares of FNB common stock received will equal the shareholder's aggregate
adjusted tax basis in the shares of SWVA common stock surrendered. The holding
period of the

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<PAGE>

shares of FNB common stock received pursuant to the merger will include the
holding period of the shares of SWVA common stock surrendered therefor.

SWVA Shareholders Who Receive Solely Cash. SWVA shareholders who exchange
their stock solely for cash consideration in the merger will generally recognize
capital gain or loss in an amount equal to the difference between the amount of
cash consideration received and their adjusted tax basis in the shares of SWVA
common stock surrendered therefor. The capital gain or loss recognized would be
long-term capital gain or loss if the shareholder's holding period for the
shares of SWVA common stock so surrendered exceeds one year, and, with respect
to certain non-corporate shareholders, will be eligible for a maximum U.S.
federal income tax rate of 20%.

SWVA Shareholders Who Receive Cash and FNB Common Stock. A shareholder of
SWVA common stock who exchanges that stock for both cash consideration (other
than any cash received in lieu of a fractional share of FNB common stock) and
FNB common stock in the merger will generally realize gain or loss in an amount
equal to the difference between the sum of the cash and the fair market value of
the FNB common stock received and the shareholder's adjusted tax basis in the
SWVA common stock surrendered. The shareholder's gain, if any, will be
recognized, however, only to the extent of the amount of cash consideration
received by the shareholder. Any loss will not be recognized. Complicated rules
apply for purposes of determining the character of any gain recognized. However,
any gain recognized by a shareholder that receives both cash and FNB common
stock will, under most circumstances, be treated as capital gain.

Shareholders who receive cash in the merger and who would have owned one
percent or more of the FNB common stock if they had exchanged all of the SWVA
common stock for FNB common stock (after taking into account the merger) or who
exercise control over FNB corporate affairs should consult their tax advisors
regarding the character of any gain recognized in the merger.

A shareholder who receives cash in lieu of fractional shares of FNB
common stock will be treated as if he or she had received such fractional share
and sold it for such cash.

The aggregate adjusted tax basis of the FNB common stock received will
equal the shareholder's adjusted tax basis in the SWVA common stock surrendered,
decreased by the amount of cash received by the shareholder and increased by the
amount of gain, if any, recognized by the shareholder. The holding period of the
FNB common stock received in the merger will include the holding period of the
SWVA common stock surrendered therefor.

This discussion does not deal with all aspects of federal taxation that
may be relevant to particular SWVA shareholders. The tax consequences of the
merger may vary depending upon the particular circumstances of each SWVA
shareholder and other factors. You are urged to consult with your tax advisor to
determine the particular tax consequences of the merger to you.

This summary is based on current law. The advice in this summary is based
on, among other things, the customary assumptions and representations relating
to the facts and circumstances of, and the intentions of the parties to the
merger. Neither FNB nor SWVA has requested a ruling from the Internal Revenue
Service in connection with the merger. To meet a condition to consummation of
the merger, FNB and SWVA will receive from Mays & Valentine, L.L.P. an opinion
as to the federal income tax consequences of the merger. Such opinion is not
binding on the Internal Revenue Service.

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<PAGE>

Rights of Dissenting Shareholders

A shareholder of SWVA who objects to the merger and who complies with
provisions of Article 15 of Title 13.1 of the Virginia Code may demand the right
to receive a cash payment, if the merger is consummated, for the fair value of
his or her stock immediately before the effective date of the merger, exclusive
of any appreciation or depreciation in anticipation of the merger unless such
exclusion would be inequitable. In order to receive payment, a Dissenting
Shareholder must deliver to SWVA prior to the meeting a written notice of intent
to demand payment for his or her shares if the merger is consummated and must
not vote his or her shares in favor of the merger. The Intent to Demand Payment
should be addressed to Barbara C. Weddle, SWVA Bancshares, Inc., 302 Second
Street, S.W., Roanoke, Virginia 24011-1597. A vote against the merger will not
itself constitute such written notice and a failure to vote will not constitute
a timely written notice of intent to demand payment.

A SWVA shareholder of record may assert dissenters' rights as to fewer than
all the shares registered in his or her name only if the shareholder dissents
with respect to all shares beneficially owned by any one person and notifies
SWVA in writing of the name and address of each person on whose behalf he or she
asserts dissenters' rights. The rights of such a partial dissenter are
determined as if the shares to which he or she dissents and his or her other
shares were registered in the names of different shareholders. A beneficial
shareholder may assert dissenters' rights as to shares held on his or her behalf
by a shareholder of record only if (i) he or she submits to SWVA, the record
shareholder's written consent to the dissent not later than the time when the
beneficial shareholder asserts dissenters' rights, and (ii) he or she dissents
with respect to all shares of which he or she is the beneficial shareholder or
over which he or she has power to direct the vote.

Within 10 days after the effective date of the merger, SWVA is required to
deliver a notice in writing to each dissenting shareholder who has filed an
intent to demand payment and who has not voted such shares in favor of the
merger. The dissenter's notice shall (i) state where the demand for payment
shall be sent and where and when stock certificates shall be deposited; (ii)
supply a form for demanding payment; (iii) set a date by which SWVA must receive
the payment demand; and (iv) be accompanied by a copy of Article 15. A
dissenting shareholder who is sent a dissenter's notice must submit the payment
demand and deposit his or her stock certificates in accordance with the terms
of, and within the time frames set forth in, the dissenter's notice. As a part
of the payment demand, the dissenting shareholder must certify whether he or she
acquired beneficial ownership of the shares before or after the date of the
first public announcement of the terms of the proposed merger, which was August
7, 2000. SWVA will specify the announcement date in the dissenter's notice.

Except with respect to shares acquired after the announcement date, SWVA
shall pay a dissenting shareholder the amount SWVA estimates to be the fair
value of his or her shares, plus accrued interest. Such payment shall be made
within 30 days of receipt of the dissenting shareholder's payment demand. As to
shares acquired after the announcement date, SWVA is only obligated to estimate
the fair market value of the shares, plus accrued interest, and to offer to pay
this amount to the dissenting shareholder conditioned upon the dissenting
shareholder's agreement to accept it in full satisfaction of his or her claim.

If a dissenting shareholder believes that the amount paid or offered by
SWVA is less than the fair value of his or her shares, or that the interest due
is incorrectly calculated, that dissenting shareholder may notify SWVA of his or
her own estimate of the fair value of his shares and amount of interest due and
demand payment of such estimate (less any amount already received

21
<PAGE>

by the dissenting shareholder). The dissenting shareholder must notify SWVA of
the estimate and demand within 30 days after the date SWVA makes or offers to
make payment to the dissenting shareholder.

Within 60 days after receiving the estimate and demand, SWVA must either
commence a proceeding in the appropriate circuit court to determine the fair
value of the dissenting shareholder's shares and accrued interest, or SWVA must
pay each dissenting shareholder whose demand remains unsettled the amount
demanded. If a proceeding is commenced, the court must determine all costs of
the proceeding and must assess those costs against SWVA, except that the court
may assess costs against all or some of the dissenting shareholders to the
extent the court finds that the dissenting shareholders did not act in good
faith in demanding payment of the dissenting shareholder's estimates.

The foregoing discussion is a summary of the material provisions of Article
15. Shareholders are strongly encouraged to review carefully the full text of
Article 15, which is included as Appendix C to this proxy statement/prospectus.
The provisions of Article 15 are technical and complex, and a shareholder
failing to comply strictly with them may forfeit his dissenting shareholder's
rights. Any shareholder who intends to dissent from the merger should review the
text of those provisions carefully and also should consult with his attorney. No
further notice of the events giving rise to dissenters' rights or any steps
associated therewith will be furnished to SWVA shareholders, except as indicated
above or otherwise required by law.

Any dissenting shareholder who perfects his or her right to be paid the
fair value of his or her shares will recognize gain or loss, if any, for federal
income tax purposes upon the receipt of cash for his shares. The amount of gain
or loss and its character as ordinary or capital gain or loss will be determined
in accordance with applicable provisions of the Internal Revenue Code.

Opinion of SWVA's Financial Advisor

SWVA's Board retained RP Financial in April 2000 to provide certain
financial advisory and investment banking services to SWVA in conjunction with
the Merger, including the rendering of an opinion with respect to the fairness
of the Merger Consideration from a financial point of view to holders of SWVA
Common Stock. In requesting RP Financial's advice and opinion, SWVA's Board did
not give any special instructions to, or impose any limitations upon the scope
of the investigation which RP Financial might wish to conduct to enable it to
give its opinion. RP Financial was selected by SWVA to act as its financial
advisor because of RP Financial's expertise in the valuation of businesses and
their securities for a variety of purposes including its expertise in connection
with mergers and acquisitions of savings and loans, savings banks, and savings
and loan holding companies.

On August 7, 2000, at the meeting in which SWVA's Board approved and
adopted the Agreement and Plan of Merger and the transactions contemplated
thereby, RP Financial rendered its opinion to SWVA's Board that, as of such
date, the Merger Consideration was fair to holders of SWVA Common Stock from a
financial point of view. That opinion was updated as of the date of this Proxy
Statement/Prospectus. In connection with its opinion dated the date of this
Proxy Statement/Prospectus, RP Financial also confirmed the appropriateness of
its reliance on the analysis used to render its August 7, 2000 opinion by
performing procedures to confirm the appropriateness of such analyses and by
reviewing the assumptions on which such analyses were based and the factors
considered in connection therewith.

22
<PAGE>

The full text of the opinion of RP Financial, which sets forth the
assumptions made, matters considered and limitations on the review undertaken,
is attached as Appendix B to this Proxy Statement/Prospectus and is incorporated
herein by reference. Holders of SWVA Common Stock are urged to read the opinion
in its entirety.

The opinion of RP Financial is directed to SWVA's Board in its
consideration of the Merger Consideration as described in the Agreement and Plan
of Merger, and does not constitute a recommendation to any shareholder of SWVA
as to any action that such shareholder should take in connection with the
Agreement and Plan of Merger, or otherwise. It is further understood that the
opinion of RP Financial is based on market conditions and other circumstances
existing on the date hereof.

The opinion states that RP Financial reviewed the following material: (1)
the Agreement and Plan of Merger, dated August 7, 2000, including exhibits; (2)
financial and other information for SWVA, all with regard to balance and off-
balance sheet composition, profitability, interest rates, volumes, maturities,
trends, credit risk, interest rate risk, liquidity risk and operations: (a)
audited and unaudited financial statements for the fiscal years ended June 30,
1995 through 2000, (b) stockholder, regulatory and internal financial and other
reports through June 30, 2000, (c) the conversion prospectus, dated August 12,
1994, (d) the proxy statements for the last three years, and (e) SWVA's
management and Board comments regarding past and current business, operations,
financial condition, and future prospects; and (3) financial and other
information for FNB including: (a) unaudited and audited financial statements
for the fiscal years ended December 31, 1996 through 1999, (b) stockholder,
regulatory, internal financial and/or other reports through June 30, 2000, (c)
proxy statements for the last three years, (d) publicly-available information
pertaining to the pending acquisition of CNB Holdings, Inc., holding company for
Community National Bank, Pulaski, Virginia and (e) FNB's management comments
regarding past and current business, operations, financial condition, and future
prospects.

In addition, RP Financial stated that it reviewed financial, operational,
market area and stock price and trading characteristics for SWVA and FNB
relative to publicly-traded savings institutions and commercial banks with
comparable resources, financial condition, earnings, operations and markets. RP
Financial also considered the economic and demographic characteristics in the
local market area, and the potential impact of the regulatory, legislative and
economic environments on operations for SWVA and FNB and the public perception
of the thrift industry. In rendering its opinion, RP Financial stated that it
relied, without independent verification, on the accuracy and completeness of
the information concerning SWVA and FNB furnished by the respective institutions
to RP Financial for review, as well as publicly-available information regarding
other financial institutions and economic and demographic data. RP Financial
stated that SWVA and FNB did not restrict RP Financial as to the material it was
permitted to review. The opinion further states that RP Financial did not
perform or obtain any independent appraisals or evaluations of the assets and
liabilities and potential and/or contingent liabilities of SWVA or FNB. RP
Financial further indicated that the financial forecasts and budgets reviewed by
RP Financial were prepared by the managements of SWVA and FNB that neither SWVA
nor FNB publicly discloses internal management forecasts or budgets of the type
provided to RP Financial in connection with the review of the Merger; and such
financial forecasts were not prepared with a view towards public disclosure. The
financial forecasts and budgets were based upon numerous variables and
assumptions which are inherently uncertain, including without limitation factors
related to general economic and competitive conditions, as well as trends in
asset quality. Accordingly, RP Financial cautioned that actual results could
vary significantly from those set forth in such financial forecasts.

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<PAGE>

In connection with rendering its opinion dated August 7, 2000 and updated
as of the date of this Proxy Statement/Prospectus, RP Financial performed a
variety of analyses, which are summarized below. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analyses or summary description. RP Financial
stated that its analyses must be considered as a whole and that selecting
portions of such analyses and of the factors considered by RP Financial without
considering all such analyses and factors could create an incomplete view of the
process underlying RP Financial's opinion. In its analyses, RP Financial made
numerous assumptions with respect to industry performance, business and economic
conditions, applicable laws and regulations, and other matters, many of which
are beyond the control of SWVA. Any estimates contained in RP Financial's
analyses are not necessarily indicative of future results or values, which may
be significantly more or less favorable than such estimates. No company or
transaction utilized in RP Financial's analyses was identical to SWVA, FNB or
the Merger. None of the analyses performed by RP Financial was assigned a
greater significance by RP Financial than any other.

The following is a summary of the material financial analyses performed by
RP Financial in connection with providing its opinion of August 7, 2000.

(a) Transaction Summary. RP Financial summarized the terms of the Merger,
-------------------
including the conversion of each share of SWVA Common Stock into the right to
receive Merger Consideration in the form of cash consideration or FNB common
stock pursuant to the Exchange Ratio. RP Financial also summarized the
methodology for calculating the Exchange Ratio, the treatment of the outstanding
options to acquire SWVA Common Stock, the termination provisions incorporated in
the Agreement and Plan of Merger, and the pricing ratios indicated by the Merger
Consideration relative to the book value, earnings, assets, deposits and market
value of SWVA.

(b) Comparable Transactions Analysis. In this analysis, RP Financial
--------------------------------
conducted an evaluation of the financial terms, financial and operating
condition and market area of recent business combinations among comparable
thrift institutions both pending and completed. In conjunction with its
analysis, RP Financial considered the multiples of book value, earnings and
assets implied by the terms in such completed and pending transactions involving
selling companies whose financial characteristics were comparable to those of
SWVA including (1) companies in Virginia, announced since 1998 and with assets
less than $500 million, representing 3 transactions (the "Virginia
Transactions"); (2) companies in the Southeast region of the U.S. with total
assets less than $325 million, operating profitably, and where the transactions
were announced during calendar year 1999 and 2000, representing 18 transactions
(the "Southeast Transactions"); and (3) companies in the United States with
assets less than $500 million, operating profitably, and where the transactions
were announced during calendar year 2000, representing 21 transactions (the
"U.S. Transactions").

The median price-to-earnings multiples indicated by the Virginia
Transactions, the Southeast Transactions and the U.S. Transactions were 15.9
times, 23.4 times and 25.7 times, respectively, based on trailing twelve month
earnings. The price-to-earnings multiple indicated by the Merger Consideration
relative to SWVA's June 30, 2000 trailing twelve month fully diluted earnings is
approximately 20.5 times. The median price-to-book value ratios indicated by
the Virginia Transactions, the Southeast Transactions and the U.S. Transactions
were 158%, 131% and 131%, respectively, versus a price-to-book value ratio of
approximately 127% indicated by the Merger Consideration based on June 30, 2000
financial data. The median price-to-assets ratios indicated by the Virginia
Transactions, the Southeast Transactions and the U.S. Transactions were 14.7%,
22.9% and 16.2%, respectively, versus a price-to-assets ratio of

24
<PAGE>

approximately 10.2% indicated by the Merger Consideration based on June 30, 2000
financial data.

RP Financial also considered qualitative factors including differences
between SWVA and the three comparable groups of companies in financial condition
and operating results. The pricing ratios based on earnings and book value
indicated by the Merger Consideration were generally comparable to the median
pricing ratios indicated by the Virginia, Southeast and United States Companies
which, in conjunction with the qualitative factors, RP Financial cited in
support of its fairness conclusions. The pricing ratio based on assets indicated
by the Merger Consideration was lower than the median ratios indicated by the
Virginia, Southeast and United States Companies, which RP Financial discounted
in its fairness conclusions based on the general lack of emphasis by public
investors in price-to-assets based valuation approaches.

(c) Discounted Cash Flow Analysis. RP Financial prepared several
-----------------------------
discounted cash flow ("DCF") analyses, all of which incorporated a five year
financial projection and cash flow analysis to shareholders. The DCF analyses
incorporated several specific factors reflecting the operating environment of
SWVA on a stand-alone basis, including growth prospects in the local market, the
level of competition from other financial institutions, and future earnings
estimates for SWVA under a stand-alone business plan without the benefits of the
Merger. The projections of future cash flows to shareholders included the
continued payment of cash dividends during interim years and the receipt of
consideration at the end of five years, assuming a terminal value for SWVA
Common Stock equal to an assumed merger value. The merger value reflected an
estimate of the price that could be received for SWVA Common Stock assuming
SWVA's Board sought to pursue a merger transaction at the end of five years,
including an orderly marketing of SWVA to potential merger partners and receipt
of a control premium by the holders of SWVA Common Stock. In the "base case"
operating scenario, the projections of future cash flows assumed continued
payment of cash dividends, asset growth of 3.7% annually, a return on average
assets of approximately 0.55% of average assets, and realization of a terminal
value at the end of five years of operations equal to a combination of 140% of
book value per share and a multiple of 24x earnings per share. The cash flow
represented by the dividends and terminal value was discounted to present value
using a discount rate of 15%. The "base case" DCF analysis indicated a present
value to stockholders of $17.70 per share. In addition to the "base case"
operating scenario, RP Financial prepared DCF analyses assuming different year 5
merger values, including an "increased dividends" scenario, a "growth scenario"
and an "increased fee income scenario". The DCF analyses indicated present
values to stockholders ranging between $18.12 and $20.05 per share. RP
Financial concluded that, since the per share value implied by the Merger
Consideration exceeded the present value of future cash flows accruing to
holders of SWVA Common Stock under all scenarios, the DCF analyses supported its
fairness conclusions.

(d) Impact Analysis. RP Financial evaluated the projected financial impact
---------------
of the Merger on the balance sheet, income statement and per share financial
measures of SWVA. RP Financial's analysis considered the financial condition and
operations of SWVA and FNB at March 31, 2000 and the pro forma impact of the
Merger. Based on the Merger Consideration, RP Financial estimated that holders
of SWVA Common Stock would realize accretion in market value of approximately
134 percent, which represents the difference between the per share price
indicated by the Merger Consideration and the most recent trading price for SWVA
Common Stock prior to execution of the Agreement and Plan of Merger. RP
Financial estimated that holders of SWVA Common Stock would incur dilution of
approximately 4 percent in book value per share, would realize accretion of 58
percent in projected current year earnings per share, and would realize
accretion of 103% in dividends per share. Moreover, the holders of SWVA Common
Stock would enjoy a stronger return on assets (ROA) and return on equity (ROE)
on a

25
<PAGE>

pro forma basis relative to stand-alone operations. RP Financial considered both
the impact of the Merger on the overall financial measures of SWVA as well as
the impact of the Merger on the per share financial measures of SWVA in support
of the fairness conclusion.

In addition to these financial analyses, RP Financial considered several
other considerations in its fairness conclusions. Such other financial
considerations included the greater market capitalization of the merged company
relative to SWVA on a stand-alone basis; the greater liquidity in the shares
relative to the shares of SWVA Common Stock without the Merger and the
likelihood of greater potential stock price appreciation in the FNB shares
relative to the shares of SWVA Common Stock without the Merger. RP Financial
also considered the potential purchase prices and other financial terms
indicated by other parties that expressed an interest in pursuing a merger with
SWVA.

On the basis of these analyses and other considerations, RP Financial
concluded that the Merger Consideration, as described in the Agreement and Plan
of Merger, is fair to the shareholders of SWVA from a financial point of view.
As described above, RP Financial's opinion and presentation to SWVA's Board was
one of many factors taken into consideration by SWVA's Board in making its
determination to approve the Agreement and Plan of Merger. Although the
foregoing summary describes the material components of the analyses presented by
RP Financial to SWVA's Board, it does not purport to be a complete description
of all the analyses performed by RP Financial and is qualified by reference to
the written opinion of RP Financial set forth as Appendix B hereto, which the
SWVA shareholders are urged to read in its entirety.

Pursuant to a letter dated March 29, 2000 (the "RP Financial Engagement
Letter"), RP Financial estimates that it will receive from SWVA total fees of
$60,000 plus reimbursement of certain out-of-pocket expenses, for its services
in connection with the Merger. In addition, SWVA has agreed to indemnify RP
Financial against certain liabilities, including liabilities under the federal
securities laws.

Interests Of Certain Persons In The merger

Certain members of SWVA's management have interests in the merger in
addition to their interests as shareholders of SWVA. These interests are
described below. In each case, the SWVA Board of Directors was aware of these
potential interests, and considered them, among other matters, in approving the
Agreement and Plan of Merger and the transactions contemplated thereby.

Indemnification

FNB has generally agreed to indemnify the officers and directors of SWVA
after the merger to the same extent and on the same conditions, as they are
entitled to from SWVA before the merger. FNB also has agreed to provide
directors' and officers' liability insurance for the present officers and
directors of SWVA comparable to the coverage currently provided by SWVA before
the merger for a period of six years.

Management Following the Merger

SWVA will be merged into FNB. As a consequence, the directors and officers
of SWVA will no longer serve after the effective date of the merger. The
officers and employees of

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<PAGE>

Southwest Virginia Savings Bank, FSB will not change as a result of the merger.
J. Daniel Hardy, Jr. will be appointed to the Board of Directors of Southwest
Virginia Savings Bank, FSB.

Also on the effective date of the merger, the number of directors of FNB
shall be increased by two members by adding one member in Class I whose terms
expire at the 2003 annual meeting of shareholders of FNB and one member in Class
III whose terms expire at the 2002 annual meeting of shareholders of FNB. B. L.
Rakes shall be appointed to fill the vacancy created in Class I and F. Courtney
Hoge will be appointed to fill the vacancy in Class III. At the next annual
meeting of shareholders of FNB, management of FNB will recommend to shareholders
that Messrs. Rakes and Hoge be re-elected in the respective classes to which
they have been appointed.

In addition, under the merger agreement, all awards under SWVA's stock
option plans to officers and directors of SWVA will be converted into and become
options to acquire FNB common stock. As of the effective date of the merger, all
prior awards under the Southwest Virginia Savings Bank, FSB Management Stock
Bonus Plan will become vested without regard to any prior schedules established.

Extension of Employment Agreements

On the effective date of the merger, FNB will enter into an addendum to
each of the existing employment agreements for D. W. Shilling, President and
Chief Executive Officer of Southwest Virginia Savings Bank, FSB and Barbara
Weddle, Senior Vice President of the Bank, extending their employment agreements
for period of 36 months and 12 months, respectively, from the effective date of
the merger.

Employee Benefit Plan

Upon consummation of the merger, FNB may, subject to the following
requirements, either make available participation in its employee benefit plans
and programs to SWVA's employees or continue the plans and programs of SWVA that
it currently provides. If SWVA's employees become eligible to participate in
FNB's employee benefit plans and programs, they will do so on substantially the
same basis as FNB's employees. Subject to restrictions and limitations that
applicable law may impose, FNB will treat the service of a SWVA employee with
SWVA as service with FNB for purposes of all employee benefit plans and programs
(other than for benefit accrual, except where an SWVA plan is continued). FNB
will also honor SWVA's obligations for all accrued and unused vacation, sick
leave and personal leave and all deferred compensation contracts and agreements
that SWVA has previously disclosed to FNB. FNB has agreed that the benefits of
employees participating in SWVA's Employee Stock Ownership Plan on the effective
date of the merger will then become fully vested under that plan, that it will
continue SWVA's Employee Stock Ownership Plan for up to two years and will then
merge it into, and at that time extend participation to employees of Southwest
Virginia Savings Bank, FSB in its Employee Stock Ownership Plan. FNB has also
agreed that the benefits of employees participating in SWVA's Defined Benefit
Plan on the effective date of the merger will then become fully vested under
that plan, that SWVA's Defined Benefit Plan will be terminated no later than the
end of the plan year in which the merger occurs, and that any surplus assets in
the Defined Benefit Plan will be used to increase benefits on termination of
that plan. Finally, FNB has agreed to extend participation in its 401(k) plan to
employees of Southwest Virginia Savings Bank, FSB when SWVA's Defined Benefit
Plan is terminated.

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<PAGE>

Differences In Rights of Shareholders

Both FNB and SWVA are corporations subject to the provisions of the
Virginia Stock Corporation Act. SWVA's articles of incorporation and bylaws
presently govern SWVA's shareholder's rights. Upon consummation of the merger
and for those SWVA's shareholders who become shareholders of FNB, the articles
of incorporation and bylaws of FNB will govern your shareholder's rights.

There are a few material differences between the rights of a SWVA
shareholder under SWVA's articles of incorporation and bylaws, on the one hand,
and the rights of a FNB shareholder under the articles of incorporation and
bylaws of FNB, on the other hand, which are disclosed in the section captioned
"Differences in the Rights of FNB Shareholders and SWVA Shareholders" on page
___ .

Terms of the Agreement and Plan of Merger

Conditions to the Merger

The obligations of SWVA and FNB to consummate the merger are subject to the
satisfaction or written waiver of the following conditions:

. approval of the Agreement and Plan of Merger by the requisite
shareholder vote of the SWVA shareholders;

. receipt of all necessary regulatory approvals not conditioned or
restricted in a manner that, in the judgment of the Boards of Directors
of FNB or SWVA, materially adversely affects the economic or business
benefits of the merger so as to render inadvisable or unduly burdensome
consummation of the merger;

. the absence of actual or threatened proceedings before a court or other
governmental body relating to the merger;

. the receipt of an opinion of counsel as to the federal income tax
consequences of the merger;

. the Registration Statement of which this proxy statement/prospectus is a
part shall have been declared effective by the Securities and Exchange
Commission;

. performance by the other company of its obligations under the Agreement
and Plan of Merger;

. the accuracy, in all material respects, of the representations and
warranties of the other company contained in the Agreement and Plan of
Merger; and

. the receipt of opinions and certificates from the other company.

28
<PAGE>

Regulatory Approvals

Federal Reserve Board. The merger is subject to prior notice to the Board
of Governors of the Federal Reserve System under Section 4 of the Bank Holding
Company Act. The BHC Act requires the Federal Reserve Board, when considering a
transaction such as the merger, to take into consideration the financial and
managerial resources (including the competence, experience and integrity of the
officers, directors and principal shareholders) and future prospects of the
institutions and the convenience and needs of the communities to be served. In
addition, under the Community Reinvestment Act of 1977, as amended, the Federal
Reserve Board must take into account the record of performance of the acquiring
institution in meeting the credit needs of the entire community, including low-
and moderate-income neighborhoods, served by such institution. FNB filed its
application and notice regarding the merger with the Federal Reserve Board on
September __, 2000.

The BHC Act also prohibits the Federal Reserve Board from approving a
merger if it would 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, or if its effect in any section of the country
would be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner result in a restraint of trade, unless the
Federal Reserve Board finds that the anticompetitive effects of the merger are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served.

Under Section 4 of the BHC Act and related regulations, the Federal Reserve
Board must consider whether the performance of FNB's and SWVA's nonbanking
activities on a combined basis can reasonably be expected to produce benefits to
the public (such as greater convenience, increased competition and gains in
efficiency) that outweigh possible adverse effects (such as undue concentration
of resources, decreased or unfair competition, conflicts of interest and unsound
banking practices). This consideration includes an evaluation of the financial
and managerial resources of FNB and SWVA and the effect of the proposed
transaction on those resources.

Status of Regulatory Approvals and Other Information. FNB and SWVA have
filed (or will promptly file) all applications and notices and have taken (or
will promptly take) other appropriate action with respect to any other requisite
approvals or other action of any governmental authority. The merger agreement
provides that the obligation of each of FNB and SWVA to consummate the merger is
conditioned upon, among other things, (i) the receipt of all requisite
regulatory approvals, (ii) the termination or expiration of all statutory or
regulatory waiting periods in respect thereof and (iii) no such approvals
containing conditions, restrictions or requirements which the FNB Board
reasonably determines in good faith would, after the effective date of the
merger, have a material adverse effect on FNB and its subsidiaries taken as a
whole or reduce the benefits of the transactions contemplated in the merger
agreement to such a degree that FNB would not have entered into the merger
agreement had such been known at the date of the merger agreement.

The merger cannot proceed in the absence of the requisite regulatory
approvals. There can be no assurances that all such regulatory approvals will be
obtained or as to the dates of such approvals. There can also be no assurance
that such approvals will not contain a condition, restriction or requirement
that causes such approvals to fail to satisfy the conditions set forth in the
merger agreement.

29
<PAGE>

Waiver, Amendment and Termination

At any time on or before the effective date of the merger, any term or
condition of the merger may be waived by the party which is entitled to the
benefits thereof and without shareholder approval. The Agreement and Plan of
Merger may be amended at any time before the merger by agreement of the parties
whether before or after the shareholder meetings. However, any material change
in a material term of the Agreement and Plan of Merger would require a
resolicitation of the SWVA shareholders. Such a material change would include,
but not be limited to, a change in the exchange ratio or a change in the tax
consequences to the SWVA shareholders.

The Agreement and Plan of Merger may be terminated by FNB or SWVA, whether
before or after the approval of the merger by the SWVA shareholders:

. by mutual consent of FNB and SWVA;

. by either company if the closing does not occur on or before June 1,
2001;

. by either company if the required SWVA shareholder vote is not obtained;

. by either company if other conditions to the merger have not been met or
waived;

. by either company based on an uncured material breach of the other;

. by FNB if the average closing price of FNB's stock over the 30 trading
day period ending 10 days prior to the closing of the merger is greater
than $20.00, unless SWVA agrees to decrease the exchange ratio to what
it would be if the average closing price were equal to $20.00, so that
the SWVA shareholders would receive 1.083 shares of FNB stock for each
share of SWVA stock, provided, however, that if FNB has entered into a
merger agreement under which it would be the acquired entity, then FNB
could not terminate its acquisition of SWVA based on a greater than
$20.00 average closing price and the exchange ratio would be set at
1.083; or

. by FNB due to the happening of a Termination Event (as described in
"Termination Fees" below).

Conduct Of Business Pending the Merger

SWVA and FNB have agreed in the merger agreement, unless the prior written
consent of the other party is obtained and except as otherwise contemplated by
the merger agreement, not to, directly or through any subsidiaries:

. make any change in its authorized capital stock, or issue or sell any
additional shares;

30
<PAGE>

. make any changes in the composition, level of compensation or title of
its officers, directors or other key management personnel, except in the
ordinary course of business;

. enter into any bonus, incentive compensation, stock option, deferred
compensation or other benefit plan or employment or consulting
agreement, except in the ordinary course of business;

. knowingly waive any right to substantial value;

. amend its bylaws or articles of incorporation;

. change its lending, investment or other material policies; or

. incur any obligation or liability except in the ordinary course of its
business.

Expenses

The merger agreement provides that each party shall be responsible for all
expenses incurred by it in connection with the negotiation and consummation of
the transactions contemplated by the merger agreement.

Termination Fees

SWVA has agreed to pay FNB a termination fee of $250,000.00 within five
business days after written notice from FNB of FNB's termination of the merger
agreement because of any of the following "Termination Events:"

. SWVA, without having received FNB's prior written consent, enters into
an agreement with any person to be acquired through a merger, or
purchase or similar transaction by someone other than FNB or such other
person acquires directly from SWVA securities representing 10% or more
of the common stock of SWVA; or

. another person acquires beneficial ownership or a right to acquire
beneficial ownership of 20% or more of the outstanding common stock of
SWVA after August 7, 2000; or

. another person makes a bona fide proposal to SWVA by public announcement
or written communication that becomes the subject of public disclosure
to acquire SWVA by merger, share exchange, purchase of all or
substantially all of its assets or other similar transactions and
following such a bona fide proposal the merger agreement fails to
receive the required approval of the SWVA shareholders.

31
<PAGE>

However, SWVA shall not be required to pay FNB the termination fee if the
Boards of Directors of FNB and SWVA mutually consent to terminate or if either
party terminates the merger agreement because a condition of the merger cannot
be met or if the transaction does not close by June 1, 2001; so long as the
failure to meet a condition of the merger or to close by June 1, 2001 was not
due to one of the events listed above.

In addition, if either FNB or SWVA terminates the merger agreement because
of a material breach or failure to comply with obligations under the merger
agreement, such company will be required to reimburse the other for its costs
and expenses.

Resales of FNB Common Stock

The shares of FNB Common Stock issued in connection with the merger will be
freely transferable under the Securities Act, except for shares issued to any
shareholder who may be deemed to be an "affiliate" (generally including, without
limitation, directors, some executive officers, and beneficial owners of 10% or
more of any class of capital stock) of SWVA for purposes of Rule 145 under the
Securities Act as of the date of the meeting. Such affiliates may not sell their
shares of FNB Common Stock acquired in connection with the merger except
pursuant to an effective registration statement under the Securities Act or
other applicable exemption from the registration requirements of the Securities
Act.

Election and Allocation of Consideration

Election. Holders of shares of SWVA common stock issued and outstanding
immediately prior to the election deadline will be entitled to choose one of the
consideration options listed below on their form of election:

. to receive cash consideration for each share;

. to receive FNB common stock for each share;

. to exchange some of their shares for cash and some for FNB common stock;
or

. to indicate no preference as to type of consideration.

In the case of shareholders who do not indicate a preference for cash or
FNB common stock or who do not make an election, FNB will determine whether to
distribute cash or FNB common stock or a combination of cash and FNB common
stock.

A form of election and complete instructions for properly making an
election to receive cash, FNB common stock or a combination of cash and FNB
common stock will be mailed to shareholders not more than 45 days nor less than
30 days before the anticipated day of the closing of the merger.

Limits on Cash and Stock Consideration. Under the merger agreement, a fixed
amount of cash consideration will be paid to shareholders of SWVA common stock
in the merger. The cash amount is equal to $1,785,742.00, or approximately 20%
of the total consideration received by SWVA shareholders in the transaction. The
number of shares of SWVA common stock to be converted into the right to receive
cash consideration under the merger agreement will be equal to $1,785,742.00
divided by $20.25 (the number of cash shares). The number of shares of SWVA
common stock to be converted into the right to receive FNB common stock shall
equal the

32
<PAGE>

number of SWVA shares eligible to receive consideration minus the number of SWVA
shares converted into cash.

Allocation

If the aggregate number of shares of SWVA common stock for which cash is
elected exceeds the number of cash shares, then:

. those shares with respect to which stock elections or no elections were
made will be exchanged for shares of FNB common stock except that cash,
without interest, will be paid in place of fractional shares of FNB
common stock; and

. with respect to those shares for which cash elections were made, cash
consideration will be prorated, by multiplying the number of shares each
SWVA shareholder has elected to exchange for cash by a fraction, the
numerator of which is the number of cash shares and the denominator of
which is the aggregate number of shares of SWVA common stock for which a
cash election has been made; and

. all shares not converted into cash above will be converted into shares
of FNB common stock, except that cash, without interest, will be paid in
place of any fractional shares of FNB common stock.

If the aggregate number of shares of SWVA common stock for which stock
consideration is elected exceeds 80% of the total consideration for the
transaction, then:

. all shares with respect to which a cash election or no election was made
will be exchanged for cash;

. with respect to those shares for which stock elections were made, cash
will be prorated, by multiplying the number of shares each SWVA
shareholder has elected to exchange for stock by a fraction, the
numerator of which is the number of cash shares, less the number of
shares exchanged for cash above and the denominator of which is the
aggregate number of shares of SWVA common stock for which a stock
election has been made; and

. all shares for which stock was elected that are not exchanged for cash
above will be converted into the right to receive shares of FNB common
stock, except that cash, without interest, will be paid in place of
fractional shares of FNB common stock.

If the aggregate number of shares of SWVA common stock for which cash was
elected does not exceed the number of cash shares, and the number of shares of
SWVA common stock for which stock consideration was elected does not exceed the
80% of the total consideration for the transaction, then:

. all shares for which a cash election was made will be exchanged for
cash;

. all shares for which a stock election was made will be exchanged for
shares of FNB common stock;

. all shares for which no election was made will receive cash or shares of
FNB common stock, as determined by FNB; and

33
<PAGE>

. cash, without interest, will be paid in lieu of fractional shares of FNB
common stock.

As a result of the limitations described above, the amount of cash and
shares of FNB common stock received by shareholders may differ from their actual
elections. If the stock election is over-subscribed by the SWVA shareholders, a
shareholder who elected FNB common stock may receive part of his or her
consideration in the form of cash. If the cash election is over-subscribed by
the SWVA shareholders, a shareholder who elected cash may receive part of his or
her consideration in the form of shares of FNB common stock.

Exchange of SWVA Stock

Exchange Agent. First National Bank or its designee will act as exchange
agent in connection with the merger.

Exchange Procedures. At least 30 and no more than 45 days before the
anticipated day of the closing of the merger, the exchange agent will mail a
form of election to each shareholder of record of SWVA common stock. The
exchange agent will use its best efforts to make a form of election available to
all persons who become shareholders of SWVA during the period between the voting
record date (October ___, 2000) and the closing of the merger. To be effective,
a form of election must be:

. properly completed and signed by the shareholder of record; and

. delivered to the exchange agent by no later than 5:00 p.m. on the fifth
business day immediately preceding the closing of the merger.

Holders may revoke their elections by filing a written revocation with the
exchange agent before the deadline for submitting elections. All elections will
be automatically revoked if the exchange agent receives written notice from FNB
and SWVA that the merger has been abandoned. FNB, and, at FNB's option, the
exchange agent, will have the discretion to determine whether forms of election
have been properly completed, signed and submitted or revoked, and to disregard
immaterial defects in the forms of election.

Promptly after the closing of the merger, the exchange agent will mail the
following materials to each shareholder of record of SWVA shares as of the
closing of the merger:

. a letter of transmittal for use in submitting such shares to the
exchange agent for exchange; and

. instructions explaining what the shareholder must do to effect the
surrender of SWVA certificates in exchange for consideration to be
issued in the merger.

Shareholders should complete and sign the letter of transmittal and return
it to the exchange agent together with his or her certificates in accordance
with the instructions.

Lost, Stolen or Destroyed Certificates. If certificates for any SWVA common
stock have been lost, stolen or destroyed, the shareholder must submit an
affidavit to that effect to the exchange agent. FNB may also require the
shareholder to deliver a bond to the exchange agent in an amount reasonably
required to indemnify the exchange agent against claims with respect to lost
certificates.

34
<PAGE>

Transfer of Ownership. The exchange agent will issue a certificate for
shares of FNB common stock in a name other than that in which the SWVA
certificate surrendered in exchange therefor was registered only if the
certificate surrendered is properly endorsed and otherwise in proper form for
transfer. The person requesting the exchange must also have paid any required
transfer or other taxes or established to the satisfaction of FNB or SWVA that
no tax is payable.

Payments Following Surrender. Until they have surrendered their
certificate, holders of certificates entitled to receive FNB common stock will
not receive:

. dividends and other distributions with respect to FNB common stock that
they are entitled to receive from the merger and that are declared or made with
a record date after the closing of the merger; or

. cash, without interest, payment in place of fractional shares of FNB
common stock.

At the time of surrender, shareholders will receive any cash due to them,
including cash in lieu of fractional shares, dividends or other distributions
paid with respect to whole FNB shares, if such distributions had a record date
after the closing of the merger. Such shareholders will also be paid on the
appropriate payment date the amount of dividends or other distributions with a
record date after the closing of the merger, but prior to surrender, and a
payment date subsequent to surrender.

Shareholders should not forward their certificates to the exchange agent,
FNB or SWVA until they have received a letter of transmittal. Shareholders
should not return certificates with the enclosed proxy. A form of election and
complete instructions for properly making an election to receive cash, FNB
common stock or a combination of cash and stock will be mailed to shareholders
under separate cover not more than 45 days nor less than 30 days before the
anticipated date of the closing of the merger.

Merger with CNB Holdings, Inc.

On July 10, 2000, FNB entered into a merger agreement with CNB Holdings,
Inc., the parent of Community National Bank, Pulaski, Virginia pursuant to which
CNB Holdings, Inc. will be merged with and into FNB.

Under the terms of the merger agreement with CNB, shareholders of CNB will
receive consideration valued at $10.60 for each share of CNB common stock, in
the form of cash, FNB common stock or a combination of cash and stock at each
CNB shareholder's election. The cash portion of the consideration, however, will
be limited to 50% of the total consideration paid. For those shares of CNB
common stock which are converted into FNB common stock, the number of FNB shares
issued will be determined by dividing $10.60 by the average closing price of FNB
shares for the 30 trading days ending 10 days prior to the closing of the CNB
merger, but in no case will FNB issue more than 0.642 shares or less than 0.544
shares for each share of CNB common stock. The CNB merger will be structured as
a tax-free reorganization to the extent of the CNB common stock exchanged for
FNB common stock.

If the mergers with both SWVA and CNB occur, FNB shareholders will own
approximately 85.6% of the combined company and current SWVA shareholders will
own approximately 8.2% of the combined company.

35
<PAGE>

Both First National Bank and Community National Bank will continue
operating under their respective managements with their current names as wholly-
owned subsidiaries of FNB. Each bank will be managed by its own board of
directors and each bank's customers will see no change in day to day operations.

The CNB merger is expected to be accounted for by the purchase-accounting
method. The CNB merger is subject to the approval of the shareholders of CNB and
appropriate regulatory agencies and other standard conditions for transactions
of this nature and is expected to close in the first quarter of 2001.

Additional information concerning the CNB merger and financial information
relating to CNB are contained in FNB's Current Report on Form 8-K dated July 13,
2000, which is incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Information by Reference."

Acquisition of First Union Branches

On September ___, 2000, FNB entered into an agreement to purchase the First
Union Bank branches located in Pearisburg and Wytheville, Virginia. As of June
30, 2000, the branches held a combined total of approximately $85 million in
deposits. The purchase is subject to approval by bank regulators and is expected
to close in the first quarter of 2001.

The SWVA Shareholder Meeting

General

We are furnishing this proxy statement/prospectus in connection with the
solicitation of proxies by the Board of Directors of SWVA for use at the meeting
of SWVA shareholders including any adjournments or postponements thereof, to be
held at [10:30 a.m.] on December ___, 2000, at__________________________,
Roanoke, Virginia.

One of the purposes of the meeting is to consider and vote upon the
Agreement and Plan of Merger, dated August 7, 2000, by and between SWVA and FNB,
which is attached to this proxy statement/prospectus as Appendix A. For a
description of the Agreement and Plan of Merger, see "Terms of the Agreement and
Plan of Merger" on page __.

At the meeting, shareholders will also consider and vote on the election of
two directors, and the ratification of the appointment of independent auditors
for the fiscal year ending June 30, 2001. For information regarding these
matters, see "Additional Information Regarding the Annual Meeting" on page ___.

Record Date; Voting Power

Only holders of record of shares of SWVA common stock at the close of
business on October __, 2000 are entitled to notice of and to vote at the
meeting. As of such date, there were ___________ issued and outstanding shares
of SWVA common stock held by approximately ____ holders of record. Holders of
record of SWVA common stock on October __, 2000 are entitled to one vote per
share on any matter that may properly come before the meeting. Brokers who hold
shares of SWVA common stock as nominees will not have discretionary authority to
vote such shares with respect to the proposed merger in the absence of
instructions from the

36
<PAGE>

beneficial owners thereof. Any such shares of SWVA common stock for which a
broker has submitted an executed proxy but for which the beneficial owner
thereof has not given instructions on voting to such broker are referred to as
"broker non-votes."

Vote Required

The presence in person or by proxy of the holders of a majority of the
shares of SWVA common stock outstanding on the SWVA record date will constitute
a quorum for the transaction of business at the meeting. Abstentions and broker
non-votes will be counted for purposes of establishing the presence of a quorum
at the meeting. The approval of the proposal to approve the Agreement and Plan
of Merger requires the affirmative vote of holders of at least two-thirds of the
shares of SWVA common stock outstanding on October __, 2000. Broker non-votes
and abstentions will be counted and will have the effect of a vote against the
proposal to approve the Agreement and Plan of Merger. Your broker may not vote
your shares on the merger without instructions from you. Without your voting
instructions a broker non-vote will occur and will have the same effect as a
vote against the merger.

As to the election of directors, the proxy being provided by the Board
enables a shareholder to vote for the election of the nominees proposed by the
Board, or to withhold authority to vote for one or both of the nominees being
proposed. Directors are elected by a plurality of votes cast.

As to the ratification of auditors, by checking the appropriate box, a
shareholder may: vote (i) "FOR" the item, (ii) vote "AGAINST" the item, or (iii)
vote to "ABSTAIN" on such item. This matter and, unless otherwise required by
law, all other matters will be determined by a majority of votes cast
affirmatively or negatively without regard to (a) broker non-votes or (b)
proxies marked "ABSTAIN" as to that matter.

On _______________, 2000, the executive officers and directors of SWVA,
including their affiliates, had voting power with respect to an aggregate of
________ shares of SWVA common stock or approximately _____% of the shares of
SWVA common stock then outstanding. SWVA currently expects that such directors
and officers will vote all of such shares in favor of the proposal to approve
the Agreement and Plan of Merger. In addition, on ____________, 2000, the
directors and executive officers of FNB did not beneficially own any shares of
SWVA common stock.

Recommendation of the Board of Directors of SWVA

The SWVA Board has unanimously approved and adopted the Agreement and Plan
of Merger. The SWVA Board believes that the merger is fair to and in the best
interests of SWVA and the SWVA shareholders and recommends that the SWVA
shareholders vote "FOR" approval of the Agreement and Plan of Merger and the
transactions contemplated thereby. See "The Merger - Reasons of SWVA for the
Merger" on page ___.

37
<PAGE>

Solicitation and Revocation of Proxies

A form of proxy is enclosed with this document. All shares of SWVA common
stock represented by properly executed proxies (whether or not through the
return of the enclosed proxy card) will, unless such proxies have been
previously revoked, be voted in accordance with the instructions indicated on
such proxies. If no instructions are indicated, such shares will be voted "FOR"
approval of the Agreement and Plan of Merger, and "FOR" both nominees for
election as director and the ratification of the appointment of independent
auditors, and in the discretion of the proxy holder as to any other matter,
which may properly come before the meeting.

You are requested to vote by completing, dating and signing the
accompanying proxy card and returning it promptly to SWVA in the enclosed,
postage-paid envelope. You should not send stock certificates with your proxy
card.

Any SWVA shareholder that has previously delivered a properly executed
proxy may revoke such proxy at any time before its exercise. A proxy may be
revoked either by (i) filing with the Secretary of SWVA prior to the meeting, at
SWVA's principal executive offices, either a written revocation of such proxy or
a duly executed proxy bearing a later date or (ii) attending the meeting and
voting in person. Presence at the meeting will not revoke a shareholder's proxy
unless such shareholder votes in person.

The cost of soliciting proxies will be borne by SWVA. Proxies may be
solicited by personal interview, mail or telephone. In addition, SWVA may
reimburse brokerage firms and other persons representing beneficial owners of
shares of SWVA common stock for their expenses in forwarding solicitation
materials to beneficial owners. Proxies may also be solicited by some of SWVA's
executive officers, directors and regular employees, without additional
compensation, personally or by telephone or facsimile transmission.

Other Matters

SWVA is unaware of any matter to be presented at the SWVA meeting other
than the election of two directors, the ratification of the appointment of
independent auditors, and the proposal to approve the Agreement and Plan of
Merger. If other matters are properly presented at the meeting, the persons
named in the enclosed form of proxy will have authority to vote all properly
executed proxies in accordance with their judgment on any such matter,
including, without limitation, any proposal to adjourn or postpone the meeting,
provided that no proxy that has been designated to vote against approval of the
Agreement and Plan of Merger will be voted in favor of any proposal to adjourn
or postpone the meeting for the purpose of soliciting additional proxies to
approve the Agreement and Plan of Merger.

Additional Information Regarding the Annual Meeting

Voting Securities and Holders Thereof

The following table sets forth information, as of October __ 2000, the
voting record date for the meeting, regarding share ownership of (1) persons or
groups who own more than 5% of the outstanding shares of SWVA common stock and
(2) all directors and executive officers of SWVA as a group. Other than as noted
below, SWVA knows of no person or group that owns more than 5% of the
outstanding shares of SWVA common stock as of October __, 2000.

38
<PAGE>

Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
----------------------------------- -------------------- -----------

Southwest Virginia Savings Bank, FSB 43,361
Employee Stock Ownership Plan 10.2%
302 Second Street, S.W.
Roanoke, Virginia 24011-1597

B. L. Rakes 42,118 (1)
302 Second Street, S.W. 9.4%
Roanoke, Virginia 24011-1597

All Directors and Executive Officers 120,771 (2)(3)(4) 25.1%
as a Group (9 persons)

__________________________________
(1) Includes 25,710 shares of common stock that the individual has a right to
acquire pursuant to exercisable options, and 815 shares of restricted
common stock that will vest within 60 days of the record date.
(2) Includes shares of common stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Includes 57,469 shares of common stock that
executive officers and directors have a right to acquire pursuant to the
exercise of options within 60 days from the Record Date. Includes 10,680
shares of common stock allocated under the Employee Stock Ownership Plan
("ESOP") to executive officers or directors, over which such individuals
exercise shared voting and investment power.
(3) Excludes 18,258 unallocated shares of common stock held under the ESOP for
which certain directors serve as members of the administrative committee
("ESOP Committee") or as trustees for the ESOP ("ESOP Trustees"). Such
individuals disclaim beneficial ownership with respect to such shares held
in a fiduciary capacity. The ESOP purchased such shares for the exclusive
benefit of ESOP participants with funds borrowed from SWVA. These shares
are held in a suspense account and are allocated among ESOP participants
annually on the basis of compensation as the ESOP debt is repaid. Messrs.
B. L. Rakes, F.C. Hoge, and Michael M. Kessler serve on the ESOP Committee
and Michael M. Kessler, James H. Brock, and Glen C. Combs serve as the ESOP
Trustees. The ESOP Committee or the Board instructs the ESOP Trustees
regarding investment of ESOP plan assets. The ESOP Trustees must vote all
shares allocated to participant accounts under the ESOP as directed by ESOP
participants. Unallocated shares and shares for which no timely voting
direction is received will be voted by the ESOP Trustees as directed by the
ESOP Committee.
(4) Excludes 11,767 shares of common stock held by the Southwest Virginia
Savings Bank, FSB Management Stock Bonus Plan ("Management Stock Bonus
Plan") as of the close of business on the Record Date. Directors Hoge,
Brock, Combs, and Kessler collectively serve as trustees to the Management
Stock Bonus Plan trust, and such individuals disclaim beneficial ownership
with respect to such shares held in a fiduciary capacity.

Section 16(a) Beneficial Ownership Reporting Compliance

The directors and officers of SWVA and beneficial owners of greater than
10% of the common stock ("10% beneficial owners") are required to file reports
on Forms 3, 4, and 5 with the Securities and Exchange Commission to disclose
changes in beneficial ownership of SWVA common stock. Based on SWVA's review of
such ownership reports, to the best of the SWVA's knowledge, no officer,
director, or 10% beneficial owner of SWVA failed to file such ownership reports
on a timely basis for the fiscal year ended June 30, 2000.

Election of Directors

SWVA's Articles of Incorporation require that the Board of Directors, which
currently consists of seven members, be divided into three classes, each of
which contains approximately one-third of the members of the Board. The
directors are elected by the shareholders of the SWVA for staggered three-year
terms, or until their successors are elected and qualified. One class,
consisting of D.W. Shilling and B.L. Rakes, has a term of office expiring at the
meeting.

39
<PAGE>

D. W. Shilling and B.L. Rakes have been nominated by the Board of
Directors to serve as directors, both for a three-year term to expire in 2003.
It is intended that the proxies solicited by the Board will be voted, unless
otherwise specified, for the election of the named nominees. If either nominee
is unable to serve, the shares represented by all valid proxies will be voted
for the election of such substitute as the Board may recommend or the size of
the Board may be reduced to eliminate the vacancy. At this time, the Board knows
of no reason why either nominee might be unavailable to serve.

The following table sets forth the nominees and the directors continuing in
office, their names, ages, the years they first became a director of SWVA or
Southwest Virginia Savings Bank, FSB, (the "Savings Bank"), the expiration date
of their current terms, and the number and percentage of shares of the SWVA
common stock beneficially owned by each. Each director of SWVA is also a member
of the Savings Bank's Board.

<TABLE>
<CAPTION>
Shares of Common
Year First Current Stock Beneficially
Elected or Term to Owned (3) Percent of
---------
Name Age(1) Appointed (2) Expire Class
---- ------ ------------ ------- -----
<S> <C> <C> <C> <C> <C>
Board Nominees for Term to Expire in 2003

B. L. Rakes 67 1977 2000 42,118 (4) 9.4%

D.W. Shilling 54 1999 2000 5,128 1.2%

Directors Continuing in Office

F. Courtney Hoge 59 1979 2001 8,612 (5)(6) 2.0%

Barbara C. Weddle 63 1987 2001 15,776 (8) 3.7%

James H. Brock 58 1985 2002 9,144 (5)(6)(7) 2.1%

Glen C. Combs 53 1987 2002 15,112 (5)(6)(7) 3.5%

Michael M. Kessler 48 1987 2002 9,966 (5)(6)(7) 2.3%
</TABLE>

_____________________________

(1) At June 30, 2000.
(2) Refers to the year the individual first became a director of SWVA or the
Savings Bank. All directors of the Savings Bank during June 1994 became
directors of SWVA when it was incorporated in June 1994.
(3) Beneficial ownership as of the record date for the meeting.
(4) Includes 25,712 shares of common stock that the individual has a right to
acquire pursuant to exercisable options, and 815 shares of restricted
common stock that will vest within 60 days of the record date.
(5) Includes 4,298 shares of common stock that the individual has a right to
acquire pursuant to exercisable options, and 163 shares of restricted
common stock that will vest within 60 days of the record date.
(6) Excludes 11,767 shares of common stock held by the Management Stock Bonus
Plan's trust, to which the individual serves as trustee. Such individual
disclaims beneficial ownership with respect to such shares held in a
fiduciary capacity.
(7) Excludes 18,258 unallocated shares of common stock held under the ESOP
for which certain directors serve as members of the ESOP Committee or as
ESOP Trustees. Such individual disclaims beneficial ownership with
respect to such shares held in a fiduciary capacity. The ESOP purchased
shares for the exclusive benefit of ESOP participants with funds borrowed
from SWVA. These shares are held in a suspense account and are allocated
among ESOP participants annually on the basis of compensation as the ESOP
debt is repaid. Messrs. B. L. Rakes, Michael M. Kessler and F. Courtney
Hoge serve on the ESOP Committee and Michael M. Kessler, James H. Brock,
and Glen C. Combs serve as the ESOP Trustees. The ESOP Committee or the
Board instructs the ESOP Trustees regarding investment of ESOP plan
assets. The ESOP Trustees must vote all shares allocated to participant
accounts under the ESOP as directed by ESOP participants. Unallocated

40
<PAGE>

shares and shares for which no timely voting direction is received will
be voted by the ESOP Trustees as directed by the ESOP Committee.
(8) Includes 8,863 shares of common stock that the individual has a right to
acquire pursuant to exercisable options and 424 shares of restricted
common stock that will vest within 60 days of the record date.

The following table sets forth information regarding the executive
officers of SWVA and the Savings Bank, including their names, ages, the years
they first became an officer of SWVA or the Savings Bank, and their current
positions with SWVA or the Savings Bank.

<TABLE>
<CAPTION>
Year First
Appointed as
Name of Individual Age (1) Officer(2) Position (3)
------------------ ------- ----------- ------------
<S> <C> <C> <C>
Wayne F. Munden 56 1985 Senior Vice President/
Director of Lending

Mary G. Staples 46 1990 Treasurer/Controller
</TABLE>

____________________
(1) As of June 30, 2000.
(2) Refers to the year the individual first became an officer of the Savings
Bank.
(3) Mr. Munden serves as an executive officer of the Savings Bank. In
addition to serving as Treasurer/Controller of SWVA, Ms. Staples serves
as Vice President of Operations and as Treasurer/Controller of the
Savings Bank.

Biographical Information. Set forth below is certain information with
respect to the executive officers and directors of SWVA and executive officers
of the Savings Bank. All directors have held their present positions for five
years unless otherwise stated.

James H. Brock is currently President of Rusco Window Company, Roanoke,
Virginia, a manufacturer and distributor of home improvement products which has
employed Mr. Brock since 1970. He is a member and past President of the Rotary
Club of Roanoke, past President of the Better Business Bureau, and a former
member of the board of directors of the Credit Marketing and Management
Association.

Glen C. Combs is Vice President of Acosta Sales, a food brokerage
company. Mr. Combs is a former member of the Rotary Club of Roanoke and the
Roanoke Food Brokers Association and a past Board member of Inter-City Athletic
Association.

F. Courtney Hoge has been an insurance sales representative for New York
Life Insurance Company, Roanoke, Virginia since 1965. He is President and a
member of the board of the Life Line Foundation of the Rescue Mission, and
serves on the Personnel Committee of the Presbyterian Community Center. He is
past President of the E. Price Ripley Memorial Foundation, past President of the
Roanoke Association of Life Underwriters, past President of the Roanoke Valley
Estate Planning Council, and past President of the Rotary Club of Roanoke -
Downtown.

Michael M. Kessler has been the President and sole shareholder of Kessler
Associates, Ltd., a photo processing company, since 1983. He is also a member
and past President of the Rotary Club of Roanoke, past President of the Virginia
Professional Photographers Association, a past member of the Board of Governors
of the Southeastern Professional Photographers Association, past chairman of the
Specialist Group of the Professional Photographers of America and a past Board
Member of the Better Business Bureau.

41
<PAGE>

B. L. Rakes became Chairman of the Boards of SWVA and the Savings Bank in
March 1999. At that time he resigned as President and Chief Financial Officer of
SWVA and resigned as President, Chief Executive Officer and Chief Financial
Officer of the Savings Bank. He resigned as Chief Executive Officer of SWVA and
retired from the Savings Bank at the end of June 1999. Mr. Rakes had been
President, Chief Executive Officer and Chief Financial Officer of the Savings
Bank since 1977 and of SWVA since 1994 and has been employed by the Savings Bank
since 1959. He served as Vice President and Treasurer from 1973 to 1977, and as
Secretary from 1974 to 1977. He is a member and past President of the Rotary
Club of Roanoke. Mr. Rakes serves as a consultant to the Savings Bank.

D. W. Shilling joined the Savings Bank in April 1998, filling the position
of Executive Vice President and Chief Operations Officer. Between January 1995
and April 1998, Mr. Shilling was a Senior Vice President and Area Manager for
the Roanoke, Virginia area of a Virginia-based commercial bank. Prior to that
time, Mr. Shilling was a Senior Vice President and Area Manager for the same
bank in the southwestern part of Virginia. Mr. Shilling became President and
Chief Executive Officer of the Savings Bank and President of SWVA in March 1999.
In June 1999, Mr. Shilling became Chief Executive Officer of SWVA. On March 1,
1999, Mr. Shilling became a director of SWVA and the Savings Bank.

Barbara C. Weddle has been Senior Vice President of the Savings Bank since
1985, in which capacity she oversees the savings, accounting and personnel
departments. She has served as Secretary of the Savings Bank since 1977. She has
been employed by the Savings Bank since 1965 in various capacities and served as
a Vice President from 1977 until 1985.

Wayne F. Munden has been a Senior Vice President since 1985 in which
capacity he is Director of Lending. He has been employed by the Savings Bank
since 1968 and served as Vice President from 1977 to 1985. He is a member of the
Rotary Club of Roanoke.

Mary G. Staples has been Vice President of Operations for the Savings Bank
since 1997. She has served as Controller/Treasurer since 1990. She has been
employed by the Savings Bank since 1972 in various capacities.

Meetings and Committees of the Board of Directors. SWVA's Board of
Directors conducts its business through meetings of the Board. The Board did not
have committees during the fiscal year ended June 30, 2000, but the committees
of the Savings Bank's Board of Directors acted as committees for both SWVA and
the Savings Bank. During the fiscal year ended June 30, 2000, the Board of
Directors of SWVA held seven regular meetings and four special meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
and committees on which such director served during the fiscal year ended June
30, 2000.

During the 2000 fiscal year, Directors Brock, Combs, Kessler, Hoge and
Weddle acted as the Nominating Committee, which is a non-standing committee, for
selecting the Board's nominees for election of directors in accordance with
SWVA's bylaws. In its deliberations, the Nominating Committee considers the
candidate's knowledge of the banking business and involvement in community,
business, and civic affairs. While the Board of Directors may consider nominees
recommended by shareholders, it has not actively solicited recommendations from
SWVA's shareholders for nominees, nor is it required to do so. The Nominating
Committee met twice during the 2000 fiscal year.

The Audit Committee, a standing committee, is comprised of Directors Hoge
(Chairman), Brock, Combs, Kessler and Rakes. The Audit Committee annually
selects the independent

42
<PAGE>

auditors and meets with the accountants to discuss and review the annual audit.
The Audit Committee is further responsible for internal controls for financial
reporting. The Audit Committee met once during the 2000 fiscal year.

The Executive Committee, a standing committee, consists of Directors Rakes
(Chairman), Combs, Shilling and Hoge. The Executive Committee offers guidance to
management, and, when necessary, it performs functions of the full Board during
the intervals between meetings of the Board of Directors. The Executive
Committee did not meet during the fiscal year ended June 30, 2000.

The Compensation Committee consists of Directors Hoge (Chairman), Shilling,
Combs and Brock. The Compensation Committee is directed to act on compensation
matters, and any action taken by the Compensation Committee must be approved by
the Board of Directors. The Board of Directors met once in fiscal 2000 to review
and approve salary adjustments for SWVA's senior management.

The Retirement Committee consists of Directors Hoge (Chairman), Kessler,
and Weddle. The Retirement Committee meets on call to review and study the
Savings Bank's retirement plans. The Retirement Committee did not meet during
fiscal 2000.

Directors' Compensation. SWVA pays an annual fee of $3,600 to each member
of its Board of Directors. SWVA paid a total of $25,200 in directors' fees
during the fiscal year ended June 30, 2000.

The Savings Bank also pays Board of Director fees. Each director is paid
$450 per meeting attended. Directors Shilling and Weddle did not receive fees
for attendance of meetings of the Board of Directors of the Savings Bank or any
of its committees during the 2000 fiscal year. Each non-employee director
attending a meeting of the Executive Committee, Retirement Committee,
Compensation Committee or Loan Committee of the Savings Bank receives a fee of
$100 per meeting attended. The Savings Bank paid a total of $37,950 in board and
committee fees to members of the Board of Directors during the fiscal year ended
June 30, 2000.

Stock Awards. On October 25, 1995, the shareholders of SWVA approved the
SWVA Bancshares, Inc. 1994 Stock Option Plan ("1994 Stock Option Plan") and the
Southwest Virginia Savings Bank, FSB Management Stock Bonus Plan ("Management
Stock Bonus Plan"). Directors Hoge, Brock, Combs, and Kessler each received (as
of the date of shareholder approval) options to purchase 2,852 shares of common
stock under the 1994 Stock Option Plan and 1,141 shares of restricted stock
under the Management Stock Bonus Plan. The options granted to these directors
are exercisable at a rate of 20% annually. Restricted stock granted to the above
named directors vest at a rate of 14.28% annually. In March 1998, each Director
of SWVA was awarded immediately exercisable stock options to purchase 1,446
shares of common stock.

Executive Compensation

Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chief Executive Officer of
SWVA during the year ended June 30, 2000. No other executive officers of SWVA
had a salary and bonus during the fiscal year ended June 30, 2000 that exceeded
$100,000 for services rendered in all capacities to SWVA.

43
<PAGE>

Long Term Compensation
Annual Compensation Awards
-------------------- -------------

Securities
Name and Restricted Underlying
Principal Fiscal Other Annual Stock Options/ All Other
Position Year Salary Bonus Compensation(1) Awards($) SARs(#) Compensation
-------- --- ------ ----- --------------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
D.W. Shilling 2000 $105,000 $ -- $3,700 $ -- -- $ 5,824(2)
Chief Executive 1999 $ 95,000 $ -- $1,300 -- -- $10,000(4)
Officer
</TABLE>
________________________
(1) Consists of board of director fees from SWVA and Southwest Virginia
Service Corp. Does not include the value of certain other benefits, such
as automobile allowances, which do not exceed 10% of the total salary and
bonus of the individual.
(2) Includes 613 shares of common stock allocated, in the 2000 fiscal year,
under the ESOP with a market value of as of June 30, 2000, of $9.50 per
share, for a total value of $5,824.
(3) Consists of funds provided with the specific requirement that they be
used by the officer to obtain an equity interest in SWVA by purchasing
shares of SWVA common stock.

Employment Agreement. The Savings Bank maintains an employment agreement
with D. W. Shilling, President and Chief Executive Officer of the Savings Bank.
The employment agreement is for a term of three years at his then current salary
level. The employment agreement is terminable by the Savings Bank for "just
cause" as defined in the employment agreement. If the Savings Bank terminates
Mr. Shilling without just cause, he will be entitled to a continuation of his
salary from the date of termination through the remaining term of the employment
agreement, but in no event for a period of less than 12 months. The employment
agreement contains a provision stating that in the event of his involuntary
termination of employment in connection with, or within two years after, any
change in control of the Savings Bank, Mr. Shilling will be paid in a lump sum
an amount equal to 2.999 times his average annual compensation for the prior
five years. Following a change in control, a termination of employment as of
June 30, 2000 would have resulted in a lump sum payment of approximately
$315,000 to Mr. Shilling. The employment agreement may be renewed annually by
the Board of Directors upon a determination of satisfactory performance.

Certain Relationships and Related Transactions. Except as noted below, no
directors, executive officers, or immediate family members of such individuals
were engaged in transactions with the Savings Bank or any subsidiary involving
more than $60,000 during the fiscal year ended June 30, 2000. Furthermore, the
Savings Bank had no "interlocking" relationships existing on or after June 30,
2000 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the Savings Bank's Board of Directors, or where (ii) any executive
officer is a member of the compensation committee of another entity, one of
whose executive officers is a member of the Savings Bank's Board of Directors.

Set forth below is certain information as of June 30, 2000, relating to
mortgage and other loans given to executive officers and directors and their
immediate family who had aggregate outstanding loan balances with the Savings
Bank of $60,000 or greater.

The Savings Bank, like many financial institutions, has followed a policy
of granting various types of loans to officers, directors, and employees. Such
loans have been made in the ordinary course of business and on substantially the
same terms, including interest rates and collateral as those prevailing at the
time for comparable transactions with the Savings Bank's other customers, and do
not involve more than the normal risk of collectability, nor present other

44
<PAGE>

unfavorable features. However, as part of the Savings Bank's compensation
program, the Savings Bank makes adjustable-rate first mortgage loans to full-
time employees, officers, directors and related parties at 1% above the Savings
Bank's cost of funds while adjustable-rate second mortgages and cash out
refinances are made at 1.5% above the Savings Bank's cost of funds. Such rates
are only effective while such persons are employees, officers, directors
(including loans to related parties of such individuals) of the Savings Bank and
continue to occupy the real estate securing the loans as their primary
residence.

<TABLE>
<CAPTION>
Highest Unpaid
Balance
Outstanding
During Last Unpaid
Original Interest Prevailing Rate Two Fiscal Balance As
Name of Officer Date Loan Rate at Time Loan Years Ended Of June 30,
or Director Type of Loan Originated Amount Charged was Made June 30, 2000 2000
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wayne F. Munden Home Mortgage 05/30/97 $200,000 5.75%(1) 5.50% $193,557 $189,142
</TABLE>
_____________________
(1) The interest rate of 5.75% on the home mortgage loan is an adjustable rate
mortgage plan. The loan was modified at the time the loan was made to 1% above
the cost of Savings Bank's funds rounded to the next one-quarter percent. The
rate on this loan adjusts annually. The loan was originated with a 5.5%
interest rate.

Ratification of Appointment of Auditors

Cherry Bekaert & Holland L.L.P. served as SWVA's auditors for the fiscal
year ended June 30, 2000. The Board of Directors has approved the selection of
Cherry Bekaert & Holland L.L.P. as its auditors for the fiscal year ended June
30, 2001 subject to ratification by SWVA's shareholders. A representative of
Cherry Bekaert & Holland L.L.P. is expected to be present at the meeting to
respond to shareholders' questions and will have the opportunity to make a
statement if he or she so desires.

The Board of Directors recommends that shareholders vote "FOR" the
ratification of the appointment of Cherry Bekaert & Holland L.L.P. as SWVA's
auditors for the fiscal year ended June 30, 2001.

The Companies

SWVA

SWVA is a Virginia-chartered corporation organized in June of 1994 at the
direction of Southwest Virginia Savings Bank, FSB to acquire all of the capital
stock that the Bank issued in its conversion from the mutual to stock form of
ownership. On October 7, 1994, the Bank completed the conversion and became a
wholly owned subsidiary of SWVA. In connection with the conversion, SWVA issued
570,590 shares of its Common Stock, par value $.10 per share. SWVA is a unitary
savings and loan holding company which, under existing laws, generally is not
restricted in the types of business activities in which it may engage provided
that the Bank retains a specified amount of its assets in housing-related
investments.

The Bank is primarily engaged in attracting deposits from the general
public and using those funds to originate real estate loans on one- to four-
family residences and, to a lesser extent, construction, multi-family and non-
residential real estate loans, commercial loans and consumer loans. In addition,
the Bank invests in investments securities and mortgage-backed securities. The
Bank offers its customers both ARMs and fixed-rate mortgage loans. ARMs are
originated

45
<PAGE>

for retention in the Bank's portfolio. Generally, the Bank sells fixed rate
mortgage loans upon origination in the secondary market. Depending on the level
of prevailing interest rates, the Bank may retain fixed rate mortgage loans in
its portfolio. Management of the Bank determines whether to retain fixed rate
mortgage loans in its portfolio over the average life of the loan. All
commercial and consumer loans are retained in the Bank's portfolio and
management anticipates that the future focus on these types of loans will
generate new business that will enable the Bank to reduce its dependence on
mortgage activity.

The principal sources of funds for the Bank's lending activities are
deposits and the amortization, repayment and maturity of loans, investments and
mortgaged-backed securities. The Bank's primary sources of income are interest
and fees on loans, interest on investments and mortgage-backed securities and
customer service fees. The Bank's primary expense is interest paid on deposits.

The Bank's primary market area consists of Roanoke County, the City of
Roanoke, the City of Salem, and the County of Botetourt. The Bank regards this
area as its "basic" lending area, but loans are also made in the adjoining
counties of Bedford and Franklin.

The Bank's main office is located at 302 Second Street, S.W., in the City
of Roanoke, Virginia. The Bank has one branch office located in the City of
Roanoke. The Bank has another branch and a loan production office located in
Roanoke County, as well as branch offices in Vinton and Salem, Virginia.

The Roanoke Valley is equidistant from New York and Atlanta, 230 miles
south of Washington, D.C. and 250 miles west of the Port of Hampton Roads,
Virginia. The population in the Roanoke Valley area has remained relatively
stable over the past thirty years and was 269,100 according to the 1990 U.S.
Census. The Roanoke Valley area enjoys a diversified economy comprised of
services, retail, manufacturing, government offices, finance, insurance, real
estate, wholesale trade, transportation, public utilities, construction and
agriculture.

The outlying region of the Bank's market area is rural in nature and may
represent limited opportunities for lending and investment growth which could
adversely affect the Bank's ability to achieve asset growth. The Bank is the
only savings bank headquartered in the Roanoke Valley area. This area is also
served by branch offices of regional commercial banks and various community
banks and credit unions.

FNB

Subsequent to December 31, 1995, the Board of Directors of First National
Bank approved a reorganization whereby a bank holding company (FNB Corporation)
was incorporated under the laws of the Commonwealth of Virginia. On June 11,
1996, the shareholders of the Bank approved a plan for the holding company to
exchange one share of its stock for each share of stock of the Bank. A
registration statement was filed with the SEC to register the stock of the
holding company, and such registration statement was subsequently declared
effective by the SEC. On July 11, 1996, the OCC approved the plan, and the
exchange was subsequently consummated. As a result, the Bank became a wholly
owned subsidiary of the holding company during the third quarter of 1996, and
the holding company began filing periodic reports under the Securities Exchange
Act of 1934. Prior to the consummation of the exchange, the Bank filed periodic
reports with the OCC.

46
<PAGE>

First National Bank, which was organized in 1905, does a general banking
business, serving the commercial, agricultural, and personal banking needs of
its trade territory, commonly referred to as the New River Valley, which
consists of Montgomery County, Virginia and portions of surrounding counties.
The Bank engages in and offers a full range of banking services, including trust
services; demand, savings, and time deposits used to fund the loan demand in our
trade area; commercial, farm, consumer installment, mortgage, credit card, FHA
and SBA guaranteed loans.

Under national banking law, nontraditional activities of a bank must be
operated through a corporate subsidiary of the bank. During 1992, FNB formed a
wholly-owned subsidiary in order to expand its business operations. FNB
Financial Services, Inc. is a member of the Virginia Title Center, L.L.C. and
acts as an agent in the issuance of title insurance policies. Additionally, this
subsidiary has been licensed by the Commonwealth of Virginia to offer annuity
products through First National's Trust Department.

The local economy is tied primarily to the areas' three largest employers-
Virginia Polytechnic Institute and State University, with a student population
in excess of 25,000; Radford University, with a student population in excess of
8,000; and the Radford Arsenal, a large munitions plant operated under contract
to the U.S. Army by the Hercules Corporation. Other industries include a wide
variety of manufacturing concerns and agriculture-related enterprises. The
Bank's main office is located in Christiansburg, the County Seat, with offices
strategically located to take advantage of its trade area's population mix. Of
the Bank's twelve full service offices, nine are located in Montgomery County,
one in the City of Radford, one in the Town of Dublin and one in Wythe County.
One paying and receiving office is located in Montgomery County.

FNB is the largest bank in the area, with approximately 60% of those
deposits held by independent banks. It is estimated that FNB holds 36% of total
deposits in its primary trade area including the offices of those state-wide and
multi-state bank holding companies located in our trade area. Competition in the
trade area consists of state-wide and multi-state bank holding companies,
independent banks, and credit unions.

The portfolio is not concentrated within any single industry or group of
related industries, nor is there any material risk other than that which is
expected in the normal course of business of a bank in this location. FNB policy
establishes lending limits for each officer. Loan requests for amounts exceeding
loan officer lending authority are referred to the officer loan committee which
can approve loans up to 80% of the bank's legal lending limit. Loan requests
exceeding this limit are referred to the Executive Committee of the Board of
Directors.

Description of FNB Capital Stock

The descriptive information below outlines some provisions of FNB's
articles of incorporation and bylaws and the Virginia Stock Corporation Act. The
information does not purport to be complete and is qualified in all respects by
reference to the provisions of FNB's articles of incorporation and bylaws, which
are incorporated by reference as exhibits to the registration statement, and the
Virginia Business Corporation Act. See "Available Information."

47
<PAGE>

Common Stock

FNB's articles of incorporation authorized the issuance of up to ten
million shares of common stock, par value $5.00 per share.

Dividends. The holders of FNB common stock are entitled to share ratably in
dividends when and if declared by the FNB Board from funds legally available
therefor.

Voting Rights. Each holder of FNB Common Stock has one vote for each share
held on matters presented for consideration by the shareholders.

Classification of Board of Directors. The FNB Board is divided into three
classes, each serving three-year terms, so that approximately one-third of the
directors of FNB are elected at each annual meeting of the shareholders of FNB.
Classification of the FNB Board has the effect of decreasing the number of
directors that could be elected in a single year by any person who seeks to
elect its designees to a majority of the seats on the FNB Board and thereby
could impede a change in control of FNB.

Preemptive Rights. The holders of FNB common stock have no preemptive
rights to acquire any additional shares of FNB Common Stock.

Issuance of Stock. FNB's articles of incorporation authorize the FNB Board
to issue authorized shares of FNB common stock without shareholder approval.
However, FNB Common Stock is listed on the NASDAQ National Market System, which
requires shareholder approval of the issuance of additional shares of FNB common
stock under some circumstances.

Liquidation Rights. In the event of liquidation, dissolution or winding-up
of FNB, whether voluntary or involuntary, the holders of FNB common stock will
be entitled to share ratably in any of its assets or funds that are available
for distribution to its shareholders after the satisfaction of its liabilities
(or after adequate provision is made therefor).

Control Acquisitions. The Federal Change in Bank Control Act of 1978, as
amended, prohibits a person or group of persons from acquiring "control" of a
bank holding company unless the Federal Reserve Board has been given 60 days'
prior written notice of such proposed acquisition and within that time period
the Federal Reserve Board has not issued a notice disapproving the proposed
acquisition or extending for up to another 30 days the period during which such
a disapproval may be issued. An acquisition may be made prior to the expiration
of the disapproval period if the Federal Reserve Board issues written notice of
its intent not to disapprove the action. Under a rebuttable presumption
established by the Federal Reserve Board, the acquisition of more than 10% of a
class of voting stock of a bank holding company with a class of securities
registered under Section 12 of the Exchange Act would, under the circumstances
set forth in the presumption, constitute the acquisition of control.

In addition, any "company" would be required to obtain the approval of the
Federal Reserve Board under the BHC Act before acquiring 25% (5% in the case of
an acquirer that is a bank holding company) or more of the outstanding shares of
FNB common stock, or such lesser number of shares as constitute control over
FNB.

48
<PAGE>

State Anti-Takeover Statutes

The Virginia Stock Corporation Act restricts transactions between a
corporation and its affiliates and potential acquirors. The summary below is
necessarily general and is not intended to be a complete description of all the
features and consequences of those provisions, and is qualified in its entirety
by reference to the statutory provisions contained in the Virginia Stock
Corporation Act. Because both SWVA and FNB are Virginia corporations, the
provisions of the Virginia Stock Corporation Act described below apply to SWVA
and FNB and will continue to apply to FNB after the merger.

Affiliated Transactions. The Virginia Stock Corporation Act contains
provisions governing "Affiliated Transactions," found at Sections 13.1-725 -
727.1 of the Virginia Stock Corporation Act. Affiliated Transactions include
certain affiliations and share exchanges, certain material dispositions of
corporate assets not in the ordinary course of business, any dissolution of a
corporation proposed by or on behalf of an Interested Shareholder (as defined
below), and reclassifications, including reverse stock splits, recapitalizations
or affiliations of a corporation with its subsidiaries, or distributions or
other transactions which have the effect of increasing the percentage of voting
shares beneficially owned by an Interested Shareholder by more than 5%. For
purposes of the Virginia Stock Corporation Act, an "Interested Shareholder" is
defined as any beneficial owner of more than 10% of any class of the voting
securities of a Virginia corporation.

Subject to certain exceptions discussed below, the provisions governing
Affiliated Transactions require that, for three years following the date upon
which any shareholder becomes an Interested Shareholder, any Affiliated
Transaction must be approved by the affirmative vote of holders of two-thirds of
the outstanding shares of the corporation entitled to vote, other than the
shares beneficially owned by the Interested Shareholder, and by a majority (but
not less than two) of the Disinterested Directors (as defined below). A
"Disinterested Director" is defined in the Virginia Stock Corporation Act as a
member of a corporation's board of directors who (i) was a member before the
later of January 1, 1988 or the date on which an Interested Shareholder became
an Interested Shareholder and (ii) was recommended for election by, or was
elected to fill a vacancy and received the affirmative vote of, a majority of
the Disinterested Directors then on the corporation's board of directors. At the
expiration of the three year period after a shareholder becomes an Interested
Shareholder, these provisions require approval of the Affiliated Transaction by
the affirmative vote of the holders of two-thirds of the outstanding shares of
the corporation entitled to vote, other than those beneficially owned by the
Interested Shareholder.

The principal exceptions to the special voting requirement apply to
Affiliated Transactions occurring after the three year period has expired and
require either that the transaction be approved by a majority of the
corporation's Disinterested Directors or that the transaction satisfy certain
fair price requirements of the statute. In general, the fair price requirements
provide that the shareholders must receive the higher of: the highest per share
price for their shares as was paid by the Interested Shareholder for his or its
shares, or the fair market value of the shares. The fair price requirements also
require that, during the three years preceding the announcement of the proposed
Affiliated Transaction, all required dividends have been paid and no special
financial accommodations have been accorded the interested Shareholder, unless
approved by a majority of the Disinterested Directors.

None of the foregoing limitations and special voting requirements applies
to a transaction with an Interested Shareholder who has been an Interested
Shareholder continuously since the effective date of the statute (January 26,
1988) or who became an Interested Shareholder by gift or inheritance from such a
person or whose acquisition of shares making such person an

49
<PAGE>

Interested Shareholder was approved by a majority of the Disinterested Directors
of the corporation.

These provisions were designed to deter certain takeovers of Virginia
corporations. In addition, the Virginia Stock Corporation Act provides that by
affirmative vote of a majority of the voting shares other than shares owned by
any Interested Shareholder, a corporation may adopt by meeting certain voting
requirements, an amendment to its articles of incorporation or bylaws providing
that the Affiliated Transactions provisions shall not apply to the corporation.
Neither SWVA nor FNB has adopted such an amendment. Currently, no shareholder of
SWVA owns or controls 10% or more of SWVA common stock, and there are no
Interested Shareholders of SWVA or FNB as defined by the Virginia Stock
Corporation Act.

Control Share Acquisitions. The Virginia Control Share Acquisitions
statute, found at Sections 13.1-728 - 728.8 of the Virginia Stock Corporation
Act, also is designed to afford shareholders of a public company incorporated in
Virginia protection against certain types of non-negotiated acquisitions in
which a person, entity or group ("Acquiring Person") seeks to gain voting
control of that corporation. With certain enumerated exceptions, the statute
applies to acquisitions of shares of a corporation which would result in an
Acquiring Person's ownership of the corporation's shares entitled to vote in the
election of directors falling within any one of the following ranges: 20% to 33-
13%, 33-13% to 50% or 50% or more (a "Control Share Acquisition"). Shares that
are the subject of a Control Share Acquisition ("Control Shares") will not be
entitled to voting rights unless the holders of a majority of the "Disinterested
Shares" vote at an annual or special meeting of shareholders of the corporation
to accord the Control Shares with voting rights. Disinterested Shares do not
include shares owned by the Acquiring Person or by officers and inside directors
of the target company. Under certain circumstances, the statute permits an
Acquiring Person to call a special shareholders' meeting for the purpose of
considering granting voting rights to the holders of the Control Shares. As a
condition to having this matter considered at either an annual or special
meeting, the Acquiring Person must provide shareholders with detailed
disclosures about his identity, the method and financing of the Control Share
Acquisition and any plans to engage in certain transactions with, or to make
fundamental changes to, the corporation, its management or business. Under
certain circumstances, the statute grants dissenters' rights to shareholders who
vote against granting voting rights to the Control Shares. The Virginia Control
Share Acquisitions Statute also enables a corporation to make provisions for
redemption of Control Shares with no voting rights. Among the acquisitions
specifically excluded from the statute are acquisitions which are a part of
certain negotiated transactions to which the corporation is a party and which,
in the case of mergers or share exchanges, have been approved by the
corporation's shareholders under other provisions of the Virginia Stock
Corporation Act.

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<PAGE>

Listing of FNB Common Stock

The FNB common stock is traded on the NASDAQ National Market System under
the symbol "FNBP." FNB will obtain approval from NASDAQ for listing of
additional shares of FNB common stock to be issued as a result of the merger.

Differences in the Rights of FNB
Shareholders and SWVA Shareholders

General

FNB and SWVA are incorporated under the laws of Virginia and, accordingly,
the rights of SWVA's shareholders and FNB's shareholders are governed by the
laws of the Commonwealth of Virginia. In addition, as a result of the merger,
SWVA shareholders automatically will become shareholders of FNB to the extent
that they elect and receive stock consideration in the merger, and their rights
as shareholders will be determined by the articles of incorporation and bylaws
of FNB and the Virginia Stock Corporation Act, instead of by the articles of
incorporation and bylaws of SWVA. The following summarizes the material
differences in the rights of shareholders of FNB and SWVA. This summary is
necessarily general and does not purport to be a complete discussion of, and is
qualified in its entirety by reference to, the Virginia Stock Corporation Act
and the articles of incorporation and bylaws of each corporation.

Authorized Capital

FNB SWVA

Ten million (10,000,000) shares of Two million two hundred
common stock, par value five dollars twenty-five thousand (2,225,000)
($5.00) per share. As of September 14, shares of common stock, par value
2000, there were 4,086,987 shares of ten cents ($0.10) per share, and
common stock issued and outstanding. two hundred seventy-five thousand
(275,000) shares of preferred
stock, par value ten cents ($0.10)
per share.

Amendment of Articles of Incorporation and Bylaws

FNB SWVA

Approval of an amendment to the Approval of an amendment to
articles requires a vote in favor by a the articles will be governed by
majority of shareholders, provided that Virginia law, except for changes to
the amendment has been approved and Articles 6.B Bylaws, 6.C.
recommended by two-thirds of the Applicability of Statutes, 7.C
directors. If the amendment was not so Board of Directors. Removal, 7.E.
approved and recommended, a 80% vote of Duties of Directors; Liability of
shareholders is needed to amend. The Directors and Officers, 8.
bylaws may be amended by either the Indemnification, Etc., of Officers,
Board or shareholders. Directors, Employees and Agents, 9.
Meeting of Stockholders and
Stockholders Proposals, 10.
Restriction on Voting the
Corporation's Common Stock and 11.
Approval of Business Combinations,
which all require a vote in

51
<PAGE>

favor by 80% of shareholders to
amend. The bylaws may be amended by
either the Board or shareholders,
provided, that in the case of an
amendment by shareholders, a vote
in favor by 67% of shareholders is
required.

Mergers, Consolidations and Sale of Assets

FNB SWVA

Approval of a merger, consolidation Approval of a merger,
and sale of assets requires a vote in consolidation and sale of assets
favor by a majority of shareholders, requires a vote in favor by 80% of
provided that the transaction has been shareholders unless two-thirds of
approved and recommended by two-thirds the directors, who were directors
of the Directors of FNB. If the prior to the time any person
was not so approved and recommended, a acquired beneficial ownership of
transaction 80% vote of shareholders to ten percent or more of the
approve the transaction. outstanding voting stock of SWVA,
approve the transaction.

Size and Classification of Board of Directors

FNB SWVA

The Board consists of not less than The initial Board had seven
three and no more than fifteen. Directors members. The Board may increase or
are divided into three classes. Each decrease the Board provided there
class serves a three year term and the will be no fewer than five nor more
classes are as nearly equal in size as than fifteen. Directors are divided
possible. into three classes. Each class
serves as a three year term and the
classes are as nearly equal in size
as possible.

Vacancies and Removal of Directors

FNB SWVA

A director may be removed for cause A director may be removed for
by a two-thirds vote of shareholders. cause by a sixty-seven percent vote
Vacancies are filled by the majority of of shareholders. Vacancies are
the Board. filled by the majority of the
Board.

Director Liability and Indemnifications

FNB SWVA

Except for liability arising from Except for liability arising
willful misconduct or a knowing from a breach of the duty of
violation of criminal law, directors loyalty, acts or omissions not in
are indemnified to fullest extent good faith or involving intentional
permitted under the Virginia Stock misconduct or knowing violation of
Corporation Act. law, unlawful payment of dividends
or for any transaction from which
the director derived an improper
personal benefit, a director will
not

52
<PAGE>

be liable to SWVA or shareholders.
A director is only indemnified if
he is successful on the merits or
he acted in good faith.

Special Meetings of Shareholders

FNB SWVA

For both FNB and SWVA, a special meeting of shareholders may only be called
by the Chairman of the Board, a majority of the Board of Directors, and those
permitted by the Virginia Stock Corporation Act.

Shareholder Nominations and Proposals

FNB SWVA

Shareholders may nominate directors at any annual meeting. In order to do
so, a shareholder must (1) be a shareholder entitled to vote for election of
directors, (2) provide notice to company not less than 14 days and no more than
50 (60 for SWVA) days prior to the meeting and (3) provide in the notice the
nominee's name, address, occupation and number of shares held by the nominee.

Regulation

Set forth below is a brief description of some laws and regulations that
relate to the regulation of FNB and SWVA. The description of these laws and
regulations, as well as descriptions of laws and regulations contained elsewhere
herein, does not purport to be complete and is qualified in its entirety by
reference to applicable laws and regulations.

General

FNB is a bank holding company within the meaning of the Bank Holding
Company Act of 1956. SWVA is a unitary savings and loan holding company under
the Home Owners' Loan Act. FNB is supervised by the Board of Governors of the
Federal Reserve System and are required to file reports with the Federal Reserve
and provide such additional information as the Federal Reserve may require.
SWVA is supervised by the Office of Thrift Supervision and is required to file
reports with the OTS and provide such additional information as the OTS may
require. First National Bank, the banking subsidiary of FNB is a national
banking association and as such it is regulated by the Office of the Comptroller
of the Currency. The OCC conducts regular examinations of national banks,
reviewing such matters as the adequacy of loan loss reserves, quality of loans
and investments, management practices, compliance with laws, and other aspects
of their operations. In addition to these regular examinations, national banks
must furnish the OCC with periodic reports containing a full, accurate statement
of their affairs. Southwest Virginia Savings Bank, FSB is a federal savings
bank regulated by the OTS. The OTS conducts regular examinations of federal
savings banks, reviewing such matters as the adequacy of loan loss reserves,
quality of loans and investments, management practices, compliance with laws,
and other aspects of their operations. In addition to these regular
examinations, federal savings banks must furnish the OTS with periodic reports
containing a full, accurate statement of their affairs. Supervision, regulation
and examination of national banks by the OCC and federal savings banks by the
OTS are intended primarily for the protection of depositors rather than
shareholders. The various laws and regulations administered by the regulatory
agencies affect

53
<PAGE>

corporate practices, expansion of business, and provisions of services. Also,
monetary and fiscal policies of the United States directly affect bank loans and
deposits and thus may affect FNB's and SWVA's earnings. The future impact of
these policies and of the continuing regulatory changes in the financial
services industry cannot be predicted.

The BHC Act further provides that the Federal Reserve may not approve any
acquisition, merger or consolidation that would result in a monopoly or would be
in furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States, or the
effect of which may be substantially to lessen competition or to tend to create
a monopoly in any section of the country, or that in any other manner would be
in restraint of trade, unless it finds the anti-competitive effects of the
proposed transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
community to be served. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy, which is discussed below.

The BHC Act, as amended by the interstate banking provisions of the Riegle-
Neal Interstate Banking and Branching Efficiency Act of 1995, which became
effective on September 29, 1996, repealed the prior statutory restrictions on
interstate acquisitions of banks by bank holding companies. As a result, FNB and
any other bank holding company located in Virginia may now acquire a bank
located in any other state, and any bank holding company located outside
Virginia may lawfully acquire any Virginia-based bank, regardless of state law
to the contrary, in either case subject to some deposit-percentage limitations,
aging requirements, and other restrictions. The Act also generally provides
that, after June 1, 1998, national and state-chartered banks may branch
interstate through acquisitions of banks in other states. By adopting
legislation prior to that date, a state had the ability either to "opt in" and
accelerate the date after which interstate branching is permissible or "opt out"
and prohibit interstate branching altogether. The State of Virginia enacted "opt
in" legislation that permitted interstate branching in Virginia on a reciprocal
basis through June 1, 1998, and on an unlimited basis thereafter. Accordingly,
the banking subsidiaries of FNB and SWVA are currently able to establish and
operate branches in other states that have also enacted "opt in" legislation.

Subject to certain amendments made by the recently enacted Gramm-Leach-
Bliley Act of 1999 described below, the BHC Act generally prohibits FNB from
engaging in activities other than banking or managing or controlling banks,
savings banks or other permissible subsidiaries and from acquiring or retaining
direct or indirect control of any company engaged in any activities other than
those activities determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.

For example, factoring accounts receivable, acquiring or servicing loans,
leasing personal property, conducting discount securities brokerage activities,
performing some data processing services, acting as agent or broker in selling
credit life insurance and other types of insurance in connection with credit
transactions, and performing some insurance underwriting activities all have
been determined by the Federal Reserve to be permissible activities of bank
holding

54
<PAGE>

companies. Despite prior approval, the Federal Reserve has the power to order a
holding company or its subsidiaries to terminate any activity or to terminate
its ownership or control of any subsidiary when it has reasonable cause to
believe that continuation of such activity or such ownership or control
constitutes a serious risk to the financial safety, soundness, or stability of
any bank subsidiary of that bank holding company and is inconsistent with sound
banking principles.

The Gramm-Leach-Bliley Act of 1999. The Gramm-Leach-Bliley Act of 1999 was
enacted on November 12, 1999. The Act draws new lines between the types of
activities that are permitted for banking organizations as financial in nature
and those that are not permitted because they are commercial in nature. The Act
imposes Community Reinvestment Act requirements on financial service
organizations that seek to qualify for the expanded powers to engage in broader
financial activities and affiliations with financial companies that the Act
permits.

The Act creates a new form of financial organization called a financial
holding company that may own and control banks, insurance companies and
securities firms. A financial holding company is authorized to engage in any
activity that is financial in nature or incidental to an activity that is
financial in nature or is a complementary activity. These activities include
insurance, securities transactions, and traditional banking related activities.
The Act establishes a consultative and cooperative procedure between the Federal
Reserve Board and the Secretary of the Treasury for the designation of new
activities that are financial in nature within the scope of the activities
permitted by the Act for a financial holding company. A financial holding
company must satisfy special criteria to qualify for the expanded financial
powers authorized by the Act. Among those criteria are requirements that all of
the depository institutions owned by the financial holding company be rated as
well capitalized and well-managed and that all of its insured depository
institutions have received a satisfactory rating for Community Reinvestment Act
compliance during their last examination. A bank holding company that does not
qualify as a financial holding company under the Act is generally limited in the
types of activities in which it may engage to those that the Federal Reserve
Board has recognized as permissible for bank holding companies prior to the date
of enactment of the Act. These activities are described under the "General"
heading found above. The Act also authorizes a state bank to have a financial
subsidiary that engages as a principal in the same activities that are permitted
for a financial subsidiary of a national bank if the state bank meets
eligibility criteria and special conditions for maintaining the financial
subsidiary.

The Act repeals the prohibition in the Glass-Steagal Act on bank
affiliations with companies that are engaged primarily in securities
underwriting activities. The Act authorizes a financial holding company to
engage in a wide range of securities activities, including underwriting,
broker/dealer activities and investment company and investment advisory
activities.

Support of Subsidiary Banks. Under Federal Reserve and OTS policy, FNB and
SWVA are expected to act as a source of financial strength for, and to commit
resources to support their subsidiary banks. This support may be required at
times when, absent such policy, FNB may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its banking
subsidiaries are subordinate in right of payment to deposits and to certain
other indebtedness of such banks. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.

55
<PAGE>

Restrictions on Repurchase of Stock. The BHC Act permits a bank holding
company such as FNB to purchase shares of its capital stock in an amount up to
10% of its consolidated net worth within a twelve month period without prior
approval from the Federal Reserve Board, provided, however, that purchases over
10% must receive prior Federal Reserve Board approval unless the bank holding
company qualifies for an exception. The exception provides that a bank holding
company is not required to obtain prior Federal Reserve Board approval for its
repurchase if the following three conditions are met: (1) both before and
immediately after the redemption, the bank holding company is well capitalized;
(2) the bank holding company is well managed; and (3) the bank holding company
is not the subject of any unresolved supervisory issues. The Federal Reserve
Board construes the first test as requiring the holding company to have a
consolidated total risk based capital ratio of 10% or greater, a consolidated
tier-1 risk based capital ratio of 6% or more, and the holding company must not
be subject to any written regulatory agreement regarding capital. At the present
time, FNB would qualify for the exemption described above, and would continue to
do so after the proposed merger.

FDIC Regulations

The Federal Deposit Insurance Corporation Act of 1991, which became law in
December 1991, requires each federal banking agency to revise its risk-based
capital standards to ensure that those standards take adequate account of
interest rate risk, concentration of credit risk and the risks of non-
traditional activities. In addition, pursuant to FDICIA, each federal banking
agency has promulgated regulations, specifying the levels at which a financial
institution would be considered "well capitalized", "adequately capitalized",
"under capitalized", "significantly under capitalized", or "critically under
capitalized", and to take certain mandatory and discretionary supervisory
actions based on the capital level of the institution.

Under the regulations implementing the prompt corrective action provisions,
an institution shall be deemed to be (1) "well capitalized" if it has total
risk-based capital of 10% or more, has a Tier I risk-based capital ratio of 6%
or more, has a leverage capital ratio of 5% or more and is not subject to any
order or final capital directive to meet and maintain a specific capital level
for any capital measure, (2) "adequately capitalized" if it has a total risk-
based capital ratio of 8% or more, a Tier I risk-based ratio of 4% or more and a
leverage capital ratio of 4% or more (3% under certain circumstances) and does
not meet the definition of "well capitalized", (3) "undercapitalized" if it has
a total risk-based capital ratio that is less than 8%, a Tier I risk-based
capital ratio that is less than 4% or a leverage capital ratio that is less than
4% (3% in certain circumstances), (4) "significantly undercapitalized" if it has
a total risk-based capital ratio that is less than 6%, a Tier I risk-based
capital ratio that is less than 3% or a leverage capital ratio that is less than
3% and (5) "critically undercapitalized" if it has a ratio of tangible equity to
total assets that is equal to or less than 2%. In addition, under certain
circumstances, a federal banking agency may reclassify a well capitalized
institution as adequately capitalized and may require an adequately capitalized
institution or an undercapitalized institution to comply with supervisory
actions as if it were in the next lower category (except that the FDIC may not
reclassify a significantly undercapitalized institution as critically
undercapitalized). Immediately upon becoming undercapitalized, or upon failing
to submit or implement a capital plan as required, an institution shall become
subject to various regulatory restrictions.

FDICIA also contained the Truth in Savings Act, which requires disclosures
to be made in connection with deposit accounts offered to consumers. The
regulations have been adopted implementing the provisions of the Truth in
Savings Act.

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<PAGE>

In addition, significant provisions of FDICIA required federal banking
regulators to draft standards in a number of other important areas to assure
bank safety and soundness, including internal controls, information systems and
internal audit systems, credit underwriting, asset growth, compensation, loan
documentation and interest rate exposure. FDICIA also required the regulators to
establish maximum ratios of classified assets to capital, and minimum earnings
sufficient to absorb losses without impairing capital. The legislation also
contained other provisions which restricted the activities of state-chartered
banks, amended various consumer banking laws, limited the ability of "under
capitalized" banks to borrow from the Federal Reserve's discount window, and
required federal banking regulators to perform annual onsite bank examinations
and set standards for real estate lending.

Regulatory Capital Requirements

All depository institutions are required to maintain minimum levels of
regulatory capital. The federal bank regulatory agencies have established
substantially similar risked based and leverage capital standards for financial
institutions that they regulate. These regulatory agencies also may impose
capital requirements in excess of these standards on a case-by-case basis for
various reasons, including financial condition or actual or anticipated growth.
Under the risk-based capital requirements of these regulatory agencies, the bank
subsidiaries of FNB and SWVA are each required to maintain a minimum ratio of
total capital to risk-weighted assets of at least 8%. At least half of the total
capital is required to be "Tier 1 capital," which consists principally of common
and some qualifying preferred shareholders' equity, less certain intangibles and
other adjustments. The remainder ("Tier 2 capital") consists of a limited amount
of subordinated and other qualifying debt (including certain hybrid capital
instruments) and a limited amount of the general loan loss allowance. Based upon
the applicable regulations, First National Bank and Southwest Virginia Savings
Bank, FSB are both "well capitalized."

In addition, the federal regulatory agencies have established a minimum
leverage capital ratio (Tier 1 capital to tangible assets). These guidelines
provide for a minimum leverage capital ratio of 3% for banks and their
respective holding companies that meet certain specified criteria, including
that they have the highest regulatory examination rating and are not
contemplating significant growth or expansion. All other institutions are
expected to maintain a leverage ratio of at least 100 to 200 basis points above
that minimum. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels,
without significant reliance on intangible assets.

Deposit Insurance

The deposits of Southwest Virginia Savings Bank, FSB and First National
Bank are currently insured to a maximum of $100,000 per depositor, subject to
certain aggregation rules. The FDIC has implemented a risk-related assessment
system for deposit insurance premiums. All depository institutions have been
assigned to one of nine risk assessment classifications based on certain capital
and supervisory measures.

Federal Reserve System

The Federal Reserve Board requires all depository institutions to maintain
reserves against their transaction accounts (primarily NOW and Super NOW
checking accounts) and non-personal time deposits. Because required reserves
must be maintained in the form of vault cash

57
<PAGE>

or a noninterest-bearing account at a Federal Reserve Bank, the effect of this
reserve requirement is to reduce the earning assets of FNB's and SWVA's
subsidiary banks.

Office of Thrift Supervision

As a federally chartered, SAIF-insured savings association, Southwest
Virginia Savings Bank, FSB (the "Savings Bank") is subject to extensive
regulation by the Office of Thrift Supervision and the Federal Deposit Insurance
Corporation. Lending activities and other investments must comply with various
federal statutory and regulatory requirements. The Savings Bank is also subject
to certain reserve requirements promulgated by the Federal Reserve.

The OTS, in conjunction with the FDIC, regularly examines the Savings Bank
and prepares reports for the consideration of the Savings Bank's Board of
Directors on any deficiencies that are found in the Savings Bank's operations.
The Savings Bank's relationship with its depositors and borrowers is also
regulated to a great extent by federal and state law, especially in such matters
as the ownership of savings accounts and the form and content of the Savings
Bank's mortgage documents.

The Savings Bank must file reports with the OTS and the FDIC concerning its
activities and financial condition, in addition to obtaining regulatory
approvals prior to entering into certain transactions such as mergers with or
acquisitions of other savings institutions. This regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the SAIF and depositors.
The regulatory structure also gives the regulatory authorities extensive
discretion in connection with their supervisory and enforcement activities and
examination policies, including policies with respect to the classification of
assets and the establishment of adequate loan loss reserves for regulatory
purposes. Any change in such regulations, whether by the Office of Thrift
Supervision, the FDIC, or the U.S. Congress could have a material impact on the
Company, the Bank, and their operations.

OTS capital regulations require savings institutions to meet three capital
standards: (1) tangible capital equal to 1.5% of total adjusted assets, (2) a
leverage ratio (core capital) equal to at least 3% of total adjusted assets, and
(3) a risk-based capital requirement equal to 8.0% of total risk-weighted
assets.

OTS regulations also require the Savings Bank to give the OTS 30 days
advance notice of any proposed declaration of dividends to SWVA and the OTS has
the authority under its supervisory powers to prohibit the payment of dividends
to SWVA. In addition, the Savings Bank may not declare or pay a cash dividend on
its capital stock if the effect of the dividend would be to reduce the
regulatory capital of the Savings Bank below the amount required for the
liquidation account established in connection with the Merger.

OTS regulations impose limitations upon all capital distributions by
savings institutions, such as cash dividends, payments to repurchase or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out merger, and other distributions charged against capital. An
institution that exceeds all capital requirements before and after a proposed
capital distribution and has not been advised by the OTS that it is in need of
more than the normal supervision can, after prior notice to the OTS, make
capital distribution during a calendar year equal to its net income to date
during the calendar year plus retained net income for the preceding two years.
Any additional capital distributions require prior regulatory approval. In the
event the Savings Bank's capital fell below its requirements or the OTS notified
it that it was in need of

58
<PAGE>

more than normal supervision, the Savings Bank's ability to make capital
distributions could be further restricted. In addition, the OTS could prohibit a
proposed capital distribution by any institution, which would otherwise be
permitted by the regulation, if the OTS determines that such distribution would
constitute an unsafe or unsound practice.

Savings institutions must meet a QTL test or the definition of a domestic
building and loan association under Section 7701 of the Internal Revenue Code.
If the Savings Bank maintains an appropriate level of qualified thrift
investments (primarily residential mortgages and related investments, including
certain mortgage-related securities) and otherwise qualifies as a QTL or a
domestic building and loan association, it will continue to enjoy full borrowing
privileges from the FHLB of Atlanta. The required percentage of qualified thrift
investments is 65% of assets while the Code requires investments of 60% of
assets.

Experts

The consolidated financial statements of FNB as of December 31, 1999 and
1998 and for each of the years in the three-year period ended December 31, 1999
included in FNB's 1999 Annual Report on Form 10-K have been incorporated by
reference herein in reliance upon the report of McLeod & Company, independent
certified public accountants, which has been given upon the authority of that
firm as experts in accounting and auditing. McLeod & Company's report is
included in FNB's Annual Report on Form 10-K, which is incorporated by reference
herein.

The consolidated financial statements of SWVA as of June 30, 1999 and for
each of the years in the three-year period ended June 30, 1999, incorporated by
reference into SWVA's 1999 Annual Report on Form 10-KSB, have been incorporated
by reference herein in reliance upon the report of Cherry Bekaert & Holland
L.L.P., independent certified public accountants, which has been given upon the
authority of that firm as experts in accounting and auditing. Cherry Bekaert &
Holland's report is incorporated into SWVA's Annual Report on Form 10-KSB, which
is incorporated by reference herein.

Validity of FNB Common Stock

The validity of the shares of FNB Common Stock being offered hereby will be
passed upon for FNB by Mays & Valentine, L.L.P.

Shareholder Proposals

If the merger is not consummated, SWVA expects to hold its next annual
meeting of shareholders during October 2001. In the event that such a meeting is
held, any proposals of shareholders intended to be presented at such meeting
must be received at SWVA's principal executive offices at 302 Second Street,
N.W., Roanoke, VA 24011-1597, Attn: Secretary, a reasonable time before SWVA
begins to mail its proxy materials in order for such proposals to be included in
SWVA's proxy statement and form of proxy related to such meeting. As required by
Section 12 of SWVA's bylaws for business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary of SWVA. To be timely, a shareholder's notice must
be delivered to or mailed and received at the principal executive offices of
SWVA not less than 10 days prior to the meeting. A shareholder's notice to the
Secretary shall set forth as to each matter the shareholder proposes to bring
before

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<PAGE>

the annual meeting (a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on SWVA's books, of the
shareholder proposing such business, (c) the class and number of shares of
common stock of SWVA that are beneficially owned by the shareholder, and (d) any
material interest of the shareholder in such business.

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<PAGE>

APPENDIX A

AGREEMENT AND PLAN OF MERGER

BETWEEN

SWVA BANCSHARES, INC.

AND

FNB CORPORATION

_____________________

August 7, 2000
<PAGE>

TABLE OF CONTENTS

ARTICLE 1
The Merger and Related Matters

<TABLE>
<CAPTION>
Page
<S> <C> <C>
1.1 Definitions................................................................... 2
1.2 The Merger.................................................................... 2
1.3 Name and Continuing Operations................................................ 2
1.4 Management of FNB and the Banks............................................... 3
1.5 The Closing and Effective Date................................................ 3

ARTICLE 2
Basis and Manner of Conversion

2.1 Conversion of SWVA Stock...................................................... 3
2.2 Allocation.................................................................... 4
2.3 Election...................................................................... 5
2.4 Allocation of Cash Election Shares............................................ 5
2.5 Allocation of Stock Election Shares........................................... 6
2.6 No Allocation................................................................. 6
2.7 Computations.................................................................. 6
2.8 Cancellation of Shares........................................................ 6

ARTICLE 3
Manner of Exchange

3.1 Exchange Procedures........................................................... 7
3.2 Distributions with Respect to Unexchanged Shares.............................. 8
3.3 No Fractional Securities...................................................... 8
3.4 Certain Adjustments........................................................... 8
3.5 Rights of Dissenting Shareholders............................................. 9

ARTICLE 4
Representations and Warranties

4.1 Representations and Warranties of SWVA........................................ 9
(a) Organization, Standing and Power........................................ 9
(b) Authority............................................................... 9
(c) Capital Structure....................................................... 10
(d) Ownership Capital Structure and
</TABLE>
<PAGE>

<TABLE>
<S> <C>
Organization of SVSB 10
(e) Financial Statements.................................................... 11
(f) Absence of Undisclosed Liabilities...................................... 11
(g) Legal Proceedings; Compliance with Laws................................. 12
(h) Regulatory Approvals.................................................... 12
(i) Labor Relations......................................................... 12
(j) Tax Matters............................................................. 13
(k) Property................................................................ 13
(l) Reports................................................................. 13
(m) Employee Benefit Plans.................................................. 13
(n) Investment Securities................................................... 14
(o) Certain Contracts....................................................... 14
(p) Insurance............................................................... 15
(q) Loans, OREO and Allowance for Loan Losses............................... 15
(r) Absence of Material Changes and Events.................................. 16
(s) Statements True and Correct............................................. 16
(t) Brokers and Finders..................................................... 17
(u) Repurchase Agreements................................................... 17
(v) Trust Accounts.......................................................... 17
(w) Environmental Matters................................................... 17

4.2 Representations and Warranties of FNB.......................................... 18
(a) Organization, Standing and Power........................................ 18
(b) Authority............................................................... 19
(c) Capital Structure....................................................... 19
(d) Ownership of the FNB Subsidiaries; Capital Structure of the FNB
Subsidiaries; and Organization of the FNB Subsidiaries.................. 20
(e) Financial Statements.................................................... 20
(f) Absence of Undisclosed Liabilities...................................... 21
(g) Legal Proceedings; Compliance with Laws................................. 21
(h) Regulatory Approvals.................................................... 22
(i) Labor Relations......................................................... 22
(j) Tax Matters............................................................. 22
(k) Property................................................................ 22
(l) Reports................................................................. 23
(m) Employee Benefit Plans.................................................. 23
(n) Investment Securities................................................... 24
(o) Certain Contracts....................................................... 24
(p) Insurance............................................................... 24
(q) Loans, OREO, and Allowance for Loan Losses.............................. 25
(r) Absence of Material Changes and Events.................................. 26
(s) Statements True and Correct............................................. 26
(t) Brokers and Finders..................................................... 26
(u) Repurchase Agreements................................................... 26
(v) Administration of Trust Accounts........................................ 27
</TABLE>
<PAGE>

<TABLE>
<S> <C> <C>
(w) Environmental Matters................................................... 27

ARTICLE 5
Conduct Prior to the Effective Date

5.1 Access to Records and Properties............................................... 28
5.2 Confidentiality................................................................ 29
5.3 Registration Statement, Proxy Statement and
Shareholder Approval........................................................... 29
5.4 Operation of the Business of FNB and SWVA...................................... 30
5.5 Dividends...................................................................... 31
5.6 No Solicitation................................................................ 31
5.7 Regulatory Filings............................................................. 31
5.8 Public Announcements........................................................... 32
5.9 Notice of Breach............................................................... 32
5.10 Accounting Treatment........................................................... 32
5.11 Merger Consummation............................................................ 32
5.12 FNB Acquisition Transaction.................................................... 32
5.13 Affiliate Agreements........................................................... 32

ARTICLE 6
Additional Agreements

6.1 Conversion of Stock Options.................................................... 32
6.2 Benefit Plans.................................................................. 33
6.3 Indemnification................................................................ 35

ARTICLE 7
Conditions to the Merger

7.1 Conditions to Each Party's Obligations to Effect the

Merger.................................................................. 35
(a) Shareholder Approval.................................................... 35
(b) Regulatory Approvals.................................................... 36
(c) Registration Statement.................................................. 36
(d) Tax Opinion............................................................. 36
(e) Opinions of Counsel..................................................... 36
(f) Legal Proceedings....................................................... 36
(g) Amendment of SVSB ESOP.................................................. 36

7.2 Conditions to Obligations of FNB............................................... 36
(a) Representations and Warranties.......................................... 36
(b) Performance of Obligations.............................................. 37
</TABLE>
<PAGE>

<TABLE>
<S> <C> <C>
7.3 Conditions to Obligations of SWVA.............................................. 37
(a) Representations and Warranties.......................................... 37
(b) Performance of Obligations.............................................. 37
(c) Investment Banking Letter............................................... 37

ARTICLE 8
Termination

8.1 Termination.................................................................... 37
8.2 Effect of Termination.......................................................... 38
8.3 Non-Survival of Representations, Warranties and Covenants...................... 39
8.4 Expenses....................................................................... 39

ARTICLE 9
General Provisions

9.1 Entire Agreement............................................................... 40
9.2 Waiver and Amendment........................................................... 40
9.3 Descriptive Headings........................................................... 41
9.4 Governing Law.................................................................. 41
9.5 Notices........................................................................ 41
9.6 Counterparts................................................................... 42
9.7 Severability................................................................... 42
9.8 Subsidiaries................................................................... 42
</TABLE>

Exhibit 1.4 - Addendum to Employment Agreements

Exhibit A - Plan of Merger between SWVA Bancshares, Inc. and
FNB Corporation

Exhibit B - Exchange Agent Agreement

Exhibit C - Affiliate Agreement
<PAGE>

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of August 7, 2000 by and between FNB Corporation, a Virginia
corporation with its principal office located in Christiansburg, Virginia
("FNB"), and SWVA Bancshares, Inc., a Virginia corporation with its principal
office located in Roanoke, Virginia ("SWVA").

WITNESSETH:

WHEREAS, FNB and SWVA (together, the "Companies") desire to affiliate, so
that First National Bank ("First National") and Southwest Virginia Savings Bank,
FSB ("SVSB") (together, the "Banks") will be under the common control of FNB;
and

WHEREAS, FNB and SWVA have agreed to the affiliation of their two companies
through a merger under Virginia law, as a result of which SWVA would merge with
and into FNB and the shareholders of SWVA would become shareholders of FNB, all
as more specifically provided in this Agreement and the Plan of Merger in the
form attached hereto as Exhibit A (the "Plan"); and

WHEREAS, the Boards of Directors of the Companies each believe it is in the
best interests of their respective corporations and their shareholders to
affiliate as provided herein and that the respective shareholder values of FNB
and SWVA can be maximized over time through this affiliation; and

WHEREAS, the Boards of Directors of the Companies each believe that the
transaction contemplated in this Agreement is in the best interests of the
communities they serve and of their respective employees; and

WHEREAS, the Boards of Directors of the Companies each believe that after
the affiliation the holding company structure should provide management and
technical assistance and support for recruitment, training and retention of
skilled officers and employees to the Banks in order to enable the combined
organization to operate more efficiently; and

WHEREAS, the respective Boards of Directors of the Companies have resolved
that the transactions described herein are in the best interests of the parties
and their respective shareholders and have authorized and approved the execution
and delivery of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:

1
<PAGE>

ARTICLE 1
The Merger and Related Matters

1.1 Definitions. Any term defined anywhere in this Agreement shall
have the meaning ascribed to it for all purposes of this Agreement (unless
expressly noted to the contrary). In addition:

(a) the term "knowledge" when used with respect to a party shall mean
the knowledge of any "Executive Officer" of such party, as such term is defined
in Regulation O, (12 C.F.R. 215);

(b) the term "Material Adverse Effect", when applied to a party,
shall mean an event, occurrence or circumstance (including without limitation
(i) the making of any provisions for possible loan and lease losses, write-downs
or other real estate and taxes and (ii) any breach of a representation or
warranty by such party) which (a) has or is reasonably likely to have a material
adverse effect on the financial position, results of operations or business of
the party and its subsidiaries, taken as a whole, or (b) would materially impair
the party's ability to perform its obligations under this Agreement or the
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that solely for purposes of measuring whether an
event, occurrence or circumstance has a material adverse effect on such party's
results of operations, the term "results of operations" shall mean net interest
income plus non-interest income (less securities gains) less gross expenses
(excluding provisions for possible loan and lease losses, write-downs of other
real estate and taxes); and provided further, that material adverse effect and
material impairment shall not be deemed to include the impact of (i) changes in
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (ii) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks
and bank holding companies generally, and (iii) the Merger and related expenses
associated with the transactions contemplated by this Agreement on the operating
performance of the parties to this Agreement; and

(c) the term "Previously Disclosed" by a party shall mean information
set forth in a written disclosure letter that is delivered by that party to the
other party prior to or contemporaneously with the execution of this Agreement
and specifically designated as information "Previously Disclosed" pursuant to
this Agreement.

1.2 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Date as defined in Section 1.5 hereof, SWVA will be
merged with and into FNB (the "Merger"). At the Effective Date, the Merger
shall have the effect as provided in Section 13.1-721 of the Virginia Stock
Corporation Act.

1.3 Name and Continuing Operations. The respective names and banking
offices of the Banks will not change as a result of the Merger. After the
Effective Date, FNB shall continue to be headquartered in Christiansburg,
Virginia.

2
<PAGE>

1.4 Management of FNB and the Banks. The directors, officers and
employees of the Banks will not change as a result of the Merger except that
Julian D. Hardy, Jr. shall be appointed to the Board of SVSB. On the Effective
Date, the number of Directors of FNB shall be increased by two members by adding
one member in Class I whose terms expire at the 2003 annual meeting of
shareholders and by adding one member in Class III whose terms expire at the
2002 annual meeting of shareholders. B. L. Rakes shall be appointed to fill the
vacancy created in Class I and Courtney Hoge shall be appointed to fill the
vacancy created in Class III. At the next annual meeting of shareholders of
FNB, management of FNB will recommend to shareholders that those gentlemen be
elected as a member of Class I and Class III, respectively. In addition, on the
Effective Date, FNB agrees to assume the employment agreements between SWVA and
D. W. Shilling and Barbara Weddle, and as of the Effective Time, FNB shall enter
into an Addendum to the employment agreement for D. W. Shilling and Barbara
Weddle, as attached hereto as Exhibit 1.4. In addition, as of the Effective
Date, FNB shall enter into an agreement with B. L. Rakes in which FNB agrees to
pay Mr. Rakes $17,000 in consideration for his agreement not to compete with FNB
and its affiliates for a period of one year.

1.5 The Closing and Effective Date. The closing of the transactions
contemplated by this Agreement and the Plan of Merger shall take place at the
offices of FNB in Christiansburg, Virginia or at such other place as may be
mutually agreed upon by the parties. The Merger shall become effective on the
date shown on the Certificate of Merger issued by the State Corporation
Commission of Virginia effecting the Merger (the "Effective Date"). Unless
otherwise agreed upon in writing by the chief executive officers of FNB and
SWVA, subject to the conditions to the obligations of the parties to effect the
Merger as set forth in Article 6, the parties shall use their best efforts to
cause the Effective Date to occur on the first day of the month following the
month in which the conditions set forth in Sections 7.1(a) and 7.1(b) are
satisfied. All documents required by the terms of this Agreement to be
delivered at or prior to consummation of the Merger will be exchanged by the
parties at the closing of the Merger (the "Merger Closing"), which shall be held
on or before the Effective Date. FNB and SWVA shall execute and deliver to the
Virginia State Corporation Commission Articles of Merger containing a Plan of
Merger in substantially the form of Exhibit A hereto.
---------

ARTICLE 2
Basis and Manner of Conversion

2.1 Conversion of SWVA Stock. At the Effective Date, by virtue of the
Merger, each share of the common stock, par value $0.10 per share, of SWVA
("SWVA Common Stock") issued and outstanding immediately prior to the Effective
Date will be converted into either cash (the "Cash Consideration") or shares of
common stock, par value $5.00 per share, of FNB ("FNB Common Stock"), the "Stock
Consideration," which Stock Consideration together with the Cash Consideration
(the "Merger Consideration"), in each case as the holder thereof shall have
elected or be deemed to have elected in accordance with Section 2.3.

3
<PAGE>

In the case that the Market Value of FNB Common Stock (as defined
later in this Section 2.1) is equal to or greater than $15.30 per share and
equal to or less than $18.70 per share, the Cash Consideration will be $20.25
per share and the Stock Consideration will equal shares of FNB Common Stock with
a Market Value of $20.25. In the case that the Market Value of FNB Common Stock
is greater than $18.70 and less than or equal to $20.00, the Stock Consideration
will equal 1.083 shares of FNB Common Stock for each outstanding share of SWVA
Common Stock, and the Cash Consideration will be $20.25. In the case that the
Market Value of FNB Common Stock is less than $15.30 and equal to or greater
than $14.00, the Stock Consideration will equal 1.324 shares of FNB Common Stock
for each outstanding share of SWVA Common Stock, and the Cash Consideration will
be $20.25.

The Market Value of FNB Common Stock will be the average of the last
reported sales prices per share of FNB Common Stock as reported on the NASDAQ
Exchange Composite Transactions Tape (as reported in The Wall Street Journal,
-----------------------
or, if not reported thereby, another authoritative source as chosen by FNB) for
the thirty consecutive full trading days on such exchange (even if FNB Common
Stock does not trade in each such day) ending at the close of trading on the
tenth calendar day before the Effective Date (the "Market Value" and the
"Measurement Period"). The ratio of shares of FNB's Common Stock that will be
exchanged for each outstanding share of SWVA Common Stock shall be referred to
herein as the "Exchange Ratio" and shall be rounded to the nearest thousandth
decimal point.

2.2 Allocation. Notwithstanding anything in this Agreement to the
contrary, the aggregate amount of cash to be issued to shareholders of SWVA in
the Merger shall be equal to $1,785,742 (the "Cash Amount"); provided that the
Cash Amount may be changed by FNB to accommodate the exercise by FNB of its
option to change the Cash Number and the Stock Number pursuant to the last
sentence of this Section 2.2. As used in this Agreement, the Cash Number shall
mean the aggregate number of shares of SWVA Common Stock to be converted into
the right to receive the Cash Consideration in the Merger, which shall be equal
to the Cash Amount divided by $20.25. The number of shares of SWVA Common Stock
to be converted into the right to receive Stock Consideration (the "Stock
Number") will be equal to (i) the number of shares of SWVA Common Stock issued
and outstanding immediately prior to the Effective Date of the Merger less (ii)
the sum of (A) the Cash Number and (B) the aggregate number of shares of SWVA
Common Stock to be exchanged for cash pursuant to Section 3.3. FNB shall have
the option to change the Cash Number and the Stock Number to more closely follow
the actual elections of SWVA shareholders pursuant to this Article 2, so long as
such modification to the Cash Number and the Stock Number does not prevent the
condition set forth in Section 7.1(d) from being satisfied.

4
<PAGE>

Consideration, or a mixture thereof or (ii) to indicate that such record holder
has no preference as to the receipt of Cash Consideration or Stock Consideration
for all such shares held by such holder (a "Non-Election"). Shares of SWVA
Common Stock in respect of which a Non-Election is made or as to which no
election is made (collectively, "Non-Election Shares") shall be deemed by FNB to
be shares in respect of which Cash Elections or Stock Elections have been made,
as FNB shall determine. Holders of record of shares of SWVA Common Stock who
hold such shares as nominees, trustees or in other representative capacities (a
"Representative") may submit multiple Forms of Election (as hereinafter
defined), provided that each such Form of Election covers all the shares of SWVA
Common Stock held by that Representative for a particular beneficial owner.

2.4 Allocation of Cash Election Shares. In the event that the
aggregate number of shares in respect of which Cash Elections have been made
(the "Cash Election Shares") exceeds the Cash Number, all shares of SWVA Common
Stock in respect of which Stock Elections have been made (the "Stock Election
Shares") and all Non-Election Shares will be converted into the right to receive
Stock Consideration (and cash in lieu of fractional interests in accordance with
Section 3.3), and Cash Election Shares will be converted into the right to
receive Cash Consideration or Stock Consideration in the following manner:

(i) the number of Cash Election Shares covered by each Form
of Election (as defined in Section 3.1(i)) to be converted into
Cash Consideration will be determined by multiplying the number
of Cash Election Shares covered by such Form of Election by a
fraction, (A) the numerator of which is the Cash Number and (B)
the denominator of which is the aggregate number of Cash Election
Shares rounded down to the nearest whole number; and

(ii) all Cash Election Shares not converted into Cash
Consideration in accordance with Section 2.4(i) will be converted
into the right to receive Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3).

Provided, however, that cash in lieu of fractional interests and cash to be paid
in connection with rights of dissenting shareholders, as provided in Sections
3.3 and 3.5, respectively, shall not be included in any determination of whether
this Section 2.4 shall be given effect.

2.5 Allocation of Stock Election Shares. In the event that the
aggregate number of Stock Election Shares exceeds the Stock Number, all Cash
Election Shares and all Non-Election Shares (together, the " Cash Shares") will
be converted into the right to receive Cash Consideration, and all Stock
Election Shares will be converted into the right to receive Cash Consideration
or Stock Consideration in the following manner:

(i) the number of Stock Election Shares covered by each Form of
Election to be converted into Cash Consideration will be
determined by

5
<PAGE>

multiplying the number of Stock Election Shares covered by such
Form of Election by a fraction, (A) the numerator of which is the
Cash Number less the number of Cash Shares and (B) the
denominator of which is the aggregate number of Stock Election
Shares, rounded down to the nearest whole number; and

(ii) all Stock Election Shares not converted into Cash
Consideration in accordance with Section 2.5(i) will be converted
into the right to receive Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3).

2.6 No Allocation. In the event that neither Section 2.4 nor Section
2.5 is applicable, all Cash Election Shares will be converted into the right to
receive Cash Consideration, all Stock Election Shares will be converted into the
right to receive Stock Consideration (and cash in lieu of fractional interests
in accordance with Section 3.3) and Non-Election Shares will be converted into
the right to receive Cash Consideration or Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3) as the Exchange Agent
shall determine.

2.7 Computations. The Exchange Agent (as defined in Section 3.1(i))
will make all computations to give effect to this Article 2.

2.8 Cancellation of Shares. As of the Effective Date of the Merger,
all such shares of SWVA Common Stock will no longer be outstanding and
automatically be cancelled and retired and will cease to exist and each holder
of a certificate formerly representing any such shares of SWVA Common Stock (a
"SWVA Certificate") will cease to have any rights with respect thereto, except
the right to receive Merger Consideration and any additional cash in lieu of
fractional shares of FNB Common Stock to be issued or paid in consideration
therefor upon surrender of such SWVA Certificate in accordance with Article 3,
without interest, subject to rights of dissenting shareholders as provided under
Section 3.5.

ARTICLE 3
Manner of Exchange

3.1 Exchange Procedures.

(i) Not more than 45 days nor fewer than 30 days prior to the
Effective Date, First National, as the exchange agent ("Exchange
Agent"), will mail a form of election (the "Form of Election") to
each shareholder of record of SWVA as of a record date as close
as practicable to the date of mailing and mutually agreed to by
SWVA and FNB. The Exchange Agent shall enter into a written
agreement with FNB and SWVA detailing its duties and
responsibilities and shall furnish evidence of liability
insurance for such activities in a form substantially similar to
Exhibit B. In addition, the Exchange Agent will use its best
efforts to make the Form of Election available to the persons who
become shareholders of SWVA during the

6
<PAGE>

period between such record date and the Effective Date. Any
election to receive Merger Consideration will have been properly
made only if the Exchange Agent shall have received on the fifth
business day immediately preceding the Effective Date (the
"Election Deadline"), a Form of Election properly completed and
accompanied by a SWVA Certificate ("Certificate(s)") for the
shares to which such Form of Election relates, acceptable for
transfer on the books of SWVA (or an appropriate guarantee of
delivery), as set forth in such Form of Election. An election may
be revoked only by written notice received by the Exchange Agent
prior to 5:00 p.m. on the Election Deadline. If an election is so
revoked, the Certificate(s) (or guarantee of delivery, as
appropriate) to which such election relates will be promptly
returned to the person submitting the same to the Exchange Agent.

(ii) As soon as reasonably practicable after the Effective
Date, the Exchange Agent will mail to each holder of record of a
Certificate, whose shares of SWVA Common Stock were converted
into the right to receive Merger Consideration and those who
failed to return a properly completed Form of Election, (i) a
letter of transmittal (which will specify that delivery will be
effected, and risk of loss and title to the Certificates will
pass, only upon delivery of the Certificates to the Exchange
Agent and will be in such form and have such other provisions as
the Exchange Agent may specify consistent with this Agreement)
and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration.

(iii) With respect to properly made elections in accordance
with Section 3.1(i), and upon surrender in accordance with
Section 3.1(ii) of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate will be entitled
to receive in exchange therefor the Merger Consideration that
such holder has the right to receive pursuant to the provisions
of Article 2, and the Certificate so surrendered will forthwith
be canceled. In the event of a transfer of ownership of Shares
that are not registered in the transfer records of SWVA, as the
case may be, payment may be issued to a person other than the
person in whose name the Certificate so surrendered is registered
if such Certificate is properly endorsed or otherwise in proper
form for transfer and the person requesting such issuance pays
any transfer or other taxes required by reason of such payment to
a person other than the registered holder of such Certificate or
establishes to the satisfaction of FNB that such tax has been
paid or is not applicable. Until surrendered as contemplated by
this Section 3.1, each Certificate will be deemed at any time
after the Effective Date to represent only the right to receive
upon such surrender the Merger Consideration that the holder
thereof has the right to receive in respect of
7
<PAGE>

such Certificate pursuant to the provisions of Article 2. No
interest will be paid or will accrue on any cash payable to
holders of Certificates pursuant to the provisions of Article 2.

3.2 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to the shares of SWVA Common Stock with a
record date after the Effective Date shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of SWVA Common Stock
represented thereby, and no cash payment in lieu of any fractional shares shall
be paid to any such holder pursuant to Section 3.3. Subject to the effect of
unclaimed property, escheat and other applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the Certificate
representing whole shares of SWVA Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of SWVA Common Stock to which such holder
is entitled pursuant to Section 3.3, and (ii) the amount of dividends or other
distributions, if any, with a record date after the Effective Date.

3.3 No Fractional Securities. No FNB Certificates or scrip
representing fractional shares of FNB Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional shares shall not
entitle the owner thereof to vote or to any other rights of a holder of FNB
Common Stock. A holder of Shares converted in the Merger who would otherwise
have been entitled to a fractional share of FNB Common Stock shall be entitled
to receive a cash payment (without interest) in lieu of such fractional share in
an amount determined by multiplying (i) the fractional share interest to which
such holder would otherwise be entitled by (ii) the Market Value of FNB Common
Stock.

3.4 Certain Adjustments. If, after the date hereof and on or prior
to the Closing Date, the outstanding shares of SWVA Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities is declared thereon with a record date
within such period, or any similar event shall occur, the Merger Consideration
will be adjusted accordingly to provide to the holders of SWVA Common Stock,
respectively, the same economic effect as contemplated by this Agreement prior
to such reclassification, recapitalization, split-up, combination, exchange or
dividend or similar event.

3.5 Rights of Dissenting Shareholders. Shareholders of SWVA who
object to the Merger will be entitled to the rights and remedies set forth in
sections 13.1-729 through 13.1-741 of the Virginia Stock Corporation Act.

ARTICLE 4
Representation and Warranties

4.1 Representations and Warranties of SWVA. SWVA represents and
warrants to FNB as follows:

8
<PAGE>

(a) Organization, Standing and Power. (1) SWVA is a corporation duly
organized, validly existing and in good standing under the laws of Virginia. It
has all requisite corporate power and authority to carry on its business as now
being conducted and to own and operate its assets, properties and business, and
SWVA has the corporate power and authority to execute and deliver this Agreement
and perform the respective terms of this Agreement and Plan of Merger. SWVA is
duly registered as a unitary savings and loan holding company under the 12
U.S.C. (S) 1467a. SVSB is the only subsidiary of SWVA and is wholly-owned by
it, and is a federal savings bank, duly organized, validly existing and in good
standing under the laws of the United States, is in compliance in all material
respects with all rules and regulations promulgated by any relevant regulatory
authority, has all requisite corporate power and authority to carry on its
business as now being conducted and to own and operate its assets, properties
and business, is an "insured bank" as defined in the Federal Deposit Insurance
Act and applicable regulations thereunder, and its deposits are insured to the
fullest extent allowed by law by the Federal Deposit Insurance Corporation.

(2) Except as Previously Disclosed, neither SWVA nor SVSB
(collectively with SWVA, the "SWVA Companies") owns any equity securities of any
other corporation or entity.

(b) Authority. (1) The execution and delivery of this Agreement and
the Plan of Merger and the consummation of the Merger have been duly and validly
authorized by all necessary corporate action on the part of SWVA, except the
approval of shareholders. The Agreement has been approved by more than two-
thirds of SWVA's Board of Directors and represents the legal, valid, and binding
obligation of SWVA, enforceable against SWVA in accordance with its terms
(except in all such cases as enforceability may be limited by applicable
bankruptcy, insolvency, merger, moratorium or similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).

(2) Neither the execution and delivery of the Agreement, the
consummation of the transactions contemplated therein, nor the compliance by
SWVA with any of the provisions thereof will (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of SWVA, (ii)
except as Previously Disclosed, constitute or result in the breach of any term,
condition or provision of, or constitute default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon, any property or assets of
the SWVA Companies pursuant to (A) any note, bond, mortgage, indenture, or (B)
any material license, agreement, lease or other instrument or obligation, to
which any of the SWVA Companies is a party or by which any of them or any of
their properties or assets may be bound, or (iii) subject to the receipt of the
requisite approvals referred to in Section 4.7, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to any of the SWVA
Companies or any of their properties or assets.

9
<PAGE>

(c) Capital Structure. The authorized capital stock of SWVA consists
of 2,225,000 shares of common stock, par value $0.10 per share ("SWVA Common
Stock"), of which 423,612 shares (including 4,328 shares held by the Management
Stock Bonus Plan of SVSB, which have not been awarded under such plan and for
which a Cash Election shall be made) are issued and outstanding, fully paid and
nonassessable, not subject to shareholder preemptive rights, and not issued in
violation of any agreement to which SWVA is a party or otherwise bound, or of
any registration or qualification provisions of any federal or state securities
laws outstanding options to purchase 64,049 shares of SWVA Common Stock; 275,000
shares of preferred stock, par value $0.10 per share ("SWVA Preferred Stock"),
none of which shares are issued and outstanding. Except as Previously
Disclosed, there are no outstanding understandings or commitments of any
character pursuant to which SWVA and any of the SWVA Companies could be required
or expected to issue shares of capital stock.

(d) Ownership, Capital Structure, and Organization of SVSB. (1) SWVA
does not own, directly or indirectly, 5% or more of the outstanding capital
stock or other voting securities of any corporation, bank or other organization
actively engaged in business except SVSB and a service corporation wholly-owned
by SVSB, Southwest Virginia Service Corporation, Inc. The outstanding shares of
capital stock of SVSB have been duly authorized and are validly issued, and are
fully paid and nonassessable and all such shares are owned by SWVA free and
clear of all liens, claims and encumbrances and were not issued in violation of
any agreement or of any regulation or qualification provisions of federal or
state securities laws. No rights are authorized, issued or outstanding with
respect to the capital stock of SVSB and there are no agreements, understandings
or commitments relating to the right of SWVA to vote or to dispose of said
shares. None of the shares of capital stock of SVSB has been issued in
violation of the preemptive rights of any person.

(2) SVSB is a duly organized federal savings bank, validly
existing and in good standing under applicable laws. SVSB (i) has full corporate
power and authority to own, lease and operate its properties and to carry on its
business as now conducted except where the absence of such power or authority
would not have a material adverse effect on the financial condition, results of
operations or business of SWVA on a consolidated basis, and (ii) is duly
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification and where failure to do qualify would have
a material adverse effect on the financial condition, results of operations or
business of SWVA on a consolidated basis. SVSB has all federal, state, local and
foreign governmental authorizations and licenses necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, except where failure to obtain such authorization or license would
not have a material adverse effect on its business.

(e) Financial Statements. SWVA's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1999, and all other documents filed or to be filed
subsequent to June 30, 1999 under Sections 13(a), 13(c), 14 or 15(d) of the
Securities

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<PAGE>

Exchange Act of 1934, as amended (together with the rules and regulations
thereunder, the "Exchange Act"), in the form filed with the SEC (in each such
case, the "SWVA Financial Statements") 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 made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the SWVA Financial
Statements (including the related notes and schedules thereto) fairly presents
and will fairly present the financial position of the entity or entities to
which it relates as of its date and each of the statements of income and changes
in stockholders' equity and cash flows or equivalent statements in the SWVA
Financial Statements (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied to banks and savings and loan holding companies during the
periods involved, except as may be noted therein, subject to normal and
recurring year-end audit adjustments in the case of unaudited statements.

(f) Absence of Undisclosed Liabilities. At June 30, 1999, and at any
subsequent date reflected in such Financial Statements, none of the SWVA
Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the SWVA Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.

(g) Legal Proceedings; Compliance with Laws. Except as Previously
Disclosed, there are no actions, suits or proceedings instituted or pending or,
to the best knowledge of SWVA, threatened or probable of assertion against any
of the SWVA Companies, or against any property, asset, interest or right of any
of them, that are reasonably expected to have, either individually or in the
aggregate, a material adverse effect on the financial condition of SWVA on a
consolidated basis or that are reasonably expected to threaten or impede the
consummation of the transactions contemplated by this Agreement. None of the
SWVA Companies is a party to any agreement or instrument or subject to any
judgment, order, writ, injunction, decree or rule that might reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business or prospects of SWVA on a consolidated basis. Except as
Previously Disclosed, as of the date of this Agreement, none of the SWVA
Companies nor any of their 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, any federal or state governmental
agency or authority charged with the supervision or regulation of depository
institutions or mortgage lenders or engaged in the insurance of deposits which
restricts or purports to restrict in any material respect the conduct of the
business of it or any of its subsidiaries or properties, or in any manner
relates to the capital, liquidity, credit policies or management of it; and
except as Previously Disclosed, none of the SWVA Companies has been advised by
any such regulatory authority that such authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree,

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<PAGE>

agreement, memorandum of understanding, commitment letter or similar submission.
To the best knowledge of SWVA, the SWVA Companies have complied in all material
respects with all laws, ordinances, requirements, regulations or orders
applicable to its business (including environmental laws, ordinances,
requirements, regulations or orders).

(h) Regulatory Approvals. SWVA knows of no reason why the regulatory
approvals referred to in Section 7.1(b) should not be obtained without the
imposition of any condition of the type referred to in Section 7.1(b). SVSB is
in material compliance with the applicable provisions of the Community
Reinvestment Act and the regulations promulgated thereunder, and SVSB currently
has a CRA rating of satisfactory or better. To the knowledge of SWVA, there is
no fact or circumstance or set of facts or circumstances that would cause SVSB
to fail to comply with such provisions or cause the rating of SVSB to fall below
satisfactory.

(i) Labor Relations. None of the SWVA Companies 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 it the subject of
a proceeding asserting that is has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel it to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it, pending or, to the
best of its knowledge, threatened, nor is it aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in any
other organizational activity.

(j) Tax Matters. The SWVA Companies have filed all federal, state,
and local tax returns and reports required to be filed, and all taxes shown by
such returns to be due and payable have been paid or are reflected as a
liability in the SWVA Financial Statements or are being contested in good faith
and have been Previously Disclosed. Except to the extent that liabilities
therefor are specifically reflected in the SWVA Financial Statements, there are
no federal, state or local tax liabilities of the SWVA Companies other than
liabilities that have arisen since December 31, 1999, all of which have been
properly accrued or otherwise provided for on the books and records of the SWVA
Companies. Except as Previously Disclosed, no tax return or report of any of
the SWVA Companies is under examination by any taxing authority or the subject
of any administrative or judicial proceeding, and no unpaid tax deficiency has
been asserted against any of the SWVA Companies by any taxing authority.

(k) Property. Except as disclosed or reserved against in the SWVA
Financial Statements, all of the SWVA Companies have good and marketable title
free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the SWVA Financial Statements as being
owned by the SWVA Companies as of the dates thereof. To the best knowledge of
SWVA, all buildings, and all fixtures, equipment, and other property and assets
which are material to its business on a consolidated basis, held under leases or
subleases by the SWVA Companies are held under valid instruments enforceable in
accordance with their respective terms, subject to

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<PAGE>

bankruptcy, insolvency, merger, moratorium and similar laws. The buildings,
structures, and appurtenances owned, leased, or occupied by the SWVA Companies
are, to the best knowledge of SWVA, in good operating condition, in a state of
good maintenance and repair and (i) comply with applicable zoning and other
municipal laws and regulations, and (ii) there are no defects therein.

(l) Reports. Since January 1, 1998, the SWVA Companies have filed all
reports and statements, together with any amendments required to be made with
respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.

(m) Employee Benefit Plans. (1) SWVA will deliver for FNB's review,
as soon as practicable, true and complete copies of all material pension,
retirement, profit-sharing, deferred compensation, stock option, bonus, vacation
or other material incentive plans or agreements, all material medical, dental or
other health plans, all cafeteria or flexible benefits plans, all life insurance
plans and all other material employee benefit plans or fringe benefit plans and
any related trust or other funding instrument, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
SWVA or SVSB for the benefit of current or former employees, retirees or other
beneficiaries eligible to participate (collectively, the "SWVA Benefit Plans").
Any of the SWVA Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to herein as a "SWVA
ERISA Plan." No SWVA Benefit Plan is or has been a "multiemployer plan," as
defined in Section 3(37) of ERISA.

(2) Except as Previously Disclosed, all SWVA Benefit Plans are
in compliance with the applicable terms of ERISA, the Internal Revenue Code of
1986, as amended (the "IRC") and any other applicable laws, rules and
regulations the breach or violation of which could result in a material
liability to SWVA on a consolidated basis. In the case of any plan intended to
be qualified under IRC Section 401, compliance with such qualification
requirements shall mean the receipt of a current, favorable determination letter
from the Internal Revenue Service based on laws changes effective through 1994
and operation of the plan in accordance with its terms or in accordance with any
subsequently enacted law for which the remedial amendment period has not yet
ended.

(3) No SWVA ERISA Plan which is subject to the minimum funding
standards of Section 302 of ERISA or IRC Section 412 has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
present fair market value of the assets of any such plan which is a "defined
benefit plan," as that term is defined in Section 3(35) of ERISA, exceeds the
plan's "benefit liabilities," as that term is defined in Section 4001(a)(16) of
ERISA, when determined under actuarial

13
<PAGE>

factors that would apply if the plan was terminated in accordance with all
applicable legal requirements.

(n) Investment Securities. Except as Previously Disclosed and except
for pledges to secure public and trust deposits and obligations under agreements
pursuant to which any of the SWVA Companies has sold securities subject to an
obligation to repurchase, none of the investment securities reflected in the
SWVA Financial Statements is subject to any restriction, contractual, statutory,
or otherwise, which would impair materially the ability of the holder of such
investment to dispose freely of any such investment at any time.

(o) Certain Contracts. (1) Except as Previously Disclosed, neither
SWVA nor any SWVA subsidiary is a party to, or is bound by, (i) any material
agreement, arrangement or commitment, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by SWVA or SVSB or the guarantee
by SWVA or SVSB of any such obligation, (iii) any agreement, arrangement or
commitment relating to the employment of a consultant or the employment,
election, retention in office or severance of any present or former director or
officer, (iv) any agreement to make loans or for the provision, purchase or sale
of goods, services or property between SWVA or SVSB and any director or officer
of SWVA or SVSB, or any member of the immediate family or affiliate of any of
the foregoing, or (v) any agreement between SWVA or SVSB and any 5% or more
shareholder of SWVA; in each case other than agreements entered into in the
ordinary course of the banking business of SWVA or SVSB consistent with past
practice.

(2) Neither SWVA or SVSB, nor to the knowledge of SWVA, the
other party thereto, is in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument whether entered into in
the ordinary course of business or otherwise, nor has there occurred any event
that, with the lapse of time or giving of notice or both, would constitute such
a default, other than defaults of loan agreements by borrowers from SWVA or SVSB
in the ordinary course of its business.

(p) Insurance. A complete list of all policies or binders of fire,
liability, product liability, workmen's compensation, vehicular and other
insurance held by or on behalf of the SWVA Companies has previously been
furnished to FNB and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the industry
and are deemed appropriate and sufficient by SWVA. The SWVA Companies are not in
default with respect to any provision contained in any such policy or binder and
have not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion. None of the SWVA Companies has received notice
of cancellation or non-renewal of any such policy or binder. None of the SWVA
Companies has knowledge of any inaccuracy in any application for such policies
or binders, any failure to pay premiums when due or any similar state of facts
or the occurrence of any event that is reasonably likely to form the basis for
any material claim

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<PAGE>

against it not fully covered (except to the extent of any applicable deductible)
by the policies or binders referred to above. None of the SWVA Companies has
received notice from any of its insurance carriers that any insurance premiums
will be increased materially in the future or that any such insurance coverage
will not be available in the future on substantially the same terms as now in
effect.

(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of SWVA, to SWVA's best knowledge each loan reflected as an asset in
the SWVA Financial Statements or the financial statements of SVSB (i) is
evidenced by notes, agreements, or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency, and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. All loans and extensions of credit which are
subject to regulation of the Federal Reserve which have been made by SWVA and
SVSB comply therewith.

(2) The classification on the books and records of SWVA and SVSB
of loans and/or non-performing assets as nonaccrual, troubled debt
restructuring, OREO or other similar classification, complies in all material
respects with generally accepted accounting principles and applicable regulatory
accounting principles.

(3) Except for liens, security interests, claims, charges, or
such other encumbrances as have been appropriately reserved for in the SWVA
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no adverse claims or encumbrances on the OREO. All
title, hazard and other insurance claims and mortgage guaranty claims with
respect to the OREO have been timely filed and neither SWVA nor SVSB has been
received any notice of denial of any such claim.

(4) SWVA and SVSB are in possession of all of the OREO or, if
any of the OREO remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements providing for market
rental rates have been agreed upon and SWVA and/or SVSB are diligently pursuing
such eviction of summary proceedings or such rental arrangements. Except as
Previously Disclosed, no legal proceeding or quasi-legal proceeding is pending
or, to the knowledge of SWVA and SVSB, threatened concerning any OREO or any
servicing activity or omission to provide a servicing activity with respect to
any of the OREO.

(5) Except as Previously Disclosed, all loans made by any of the
SWVA Companies to facilitate the disposition of OREO are performing in
accordance with their terms.

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<PAGE>

(6) The allowance for possible loan losses shown on the SWVA
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of SWVA as of dates subsequent to the execution of this
Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding (including accrued interest
receivable) of the SWVA Companies and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by SWVA.

(r) Absence of Material Changes and Events. Since June 30, 1999,
there has not been any material adverse change in the condition (financial or
otherwise), aggregate assets or liabilities, cash flow, earnings or business or
SWVA, and SWVA has conducted its business only in the ordinary course consistent
with past practice.

(s) Statements True and Correct. None of the information supplied or
to be supplied by SWVA for inclusion in the Registration Statement, the Proxy
Statement/Prospectus or any other document to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and, in the case of the
Registration Statement, when it becomes effective and with respect to the Proxy
Statement/Prospectus, when first mailed to SWVA shareholders, be false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements therein not misleading, or, in the
case of the Proxy Statement/Prospectus or any supplement thereto, at the time of
the SWVA Shareholders' Meeting, be false or misleading with respect to any
material fact or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the SWVA Shareholders' Meeting. All documents that SWVA is responsible
for filing with the SEC or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law, including applicable provisions of
federal and state securities law.

(t) Brokers and Finders. Neither SWVA nor SVSB, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, except for RP Financial.

(u) Repurchase Agreements. With respect to all agreements pursuant to
which SWVA or SVSB has purchased securities subject to an agreement to resell,
if any, SWVA or SVSB, as the case may be, has a valid, perfected first lien or
security interest in the government securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.

(v) Trust Accounts. SVSB does not provide trust services.

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<PAGE>

(w) Environmental Matters. (1) Except as Previously Disclosed, to the
best of SWVA's knowledge, neither SWVA nor SVSB owns or leases any properties
affected by toxic waste, radon gas or other hazardous conditions or constructed
in part with the use of asbestos. Each of SWVA and SVSB is in substantial
compliance with all Environmental Laws applicable to real or personal properties
in which it has a direct fee ownership or, with respect to a direct interest as
lessee, applicable to the leasehold premises or, to the best knowledge of SWVA
and SVSB, the premises on which the leasehold is situated. Neither SWVA nor SVSB
has received any Communication alleging that SWVA or SVSB is not in such
compliance and, to the best knowledge of SWVA and SVSB, there are no present
circumstances (including Environmental Laws that have been adopted but are not
yet effective) that would prevent or interfere with the continuation of such
compliance.

(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on SWVA and SVSB of any
liability arising under any Environmental Laws pending or, to the best knowledge
of SWVA and SVSB, threatened against (A) SWVA or SVSB, (B) any person or entity
whose liability for any Environmental Claim, SWVA or SVSB has or may have
retained or assumed either contractually or by operation of law, or (C)any real
or personal property which SWVA or SVSB owns or leases, or has been or is judged
to have managed or to have supervised or participated in the management of,
which liability might have a material adverse effect on the business, financial
condition or results of operations of SWVA. SWVA and SVSB are not subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.

(3) To the best knowledge of SWVA and SVSB, there are no legal,
administrative, arbitral or other proceedings, or Environmental Claims or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on SWVA or SVSB of any
liability arising under any Environmental Laws pending or threatened against any
real or personal property in which SWVA or SVSB holds a security interest in
connection with a loan or a loan participation which liability might have a
material adverse effect on the business, financial condition or results of
operations of SWVA. SWVA and SVSB are not subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.

(4) With respect to all real and personal property owned or
leased by SWVA or SVSB, other than OREO, SWVA has made available to FNB copies
of any environmental audits, analyses and surveys that have been prepared
relating to such properties. With respect to all OREO held by SWVA or SVSB and
all real or personal property which SWVA or SVSB has been or is judged to have
managed or to have supervised or participated in the management of, SWVA has
made available to FNB the information relating to such OREO available to SWVA.
SWVA and SVSB are in compliance in all material respects with all
recommendations contained in any

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<PAGE>

environmental audits, analyses and surveys relating to any of the properties,
real or personal, described in this subsection (4).

(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against SWVA or SVSB or against any
person or entity whose liability for any Environmental Claim SWVA or SVSB has or
may have retained or assumed either contractually or by operation of law.

4.2 Representations and Warranties of FNB. FNB represents and warrants to
SWVA as follows:

(a) Organization, Standing and Power. (1) FNB is a corporation duly
organized, validly existing and in good standing under the laws of Virginia. It
has all requisite corporate power and authority to carry on its business as now
being conducted and to own and operate its assets, properties and business, and
FNB has the corporate power and authority to execute and deliver this Agreement
and perform the respective terms of this Agreement and Plan of Merger. FNB is
duly registered as a bank holding company under the Bank Holding Company Act of
1956. First National Bank, a wholly owned subsidiary of FNB, is a national
banking association, duly organized, validly existing and in good standing under
the laws of the United States, is in compliance in all material respects with
all rules and regulations promulgated by any relevant regulatory authority, it
has all requisite corporate power and authority to carry on its business as now
being conducted and to own and operate its assets, properties and business, is
an "insured bank" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder and its deposits are insured to the fullest extent
allowed by law by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation.

(2) FNB has Previously Disclosed its subsidiary corporations
(and the subsidiaries thereof) (the "FNB Subsidiaries" and, collectively with
FNB, the "FNB Companies"). Except as Previously Disclosed, none of the FNB
Companies owns any equity securities of any other corporation or entity.

(b) Authority. (1) The execution and delivery of this Agreement and
the Plan of Merger and the consummation of the Merger have been duly and validly
authorized by all necessary corporate action on the part of FNB, except the
approval of shareholders. The Agreement represents the legal, valid, and binding
obligation of FNB, enforceable against FNB in accordance with its terms (except
in all such cases as enforceability may be limited by applicable bankruptcy,
insolvency, merger, moratorium or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).

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<PAGE>

(2) Neither the execution and delivery of the Agreement, the
consummation of the transactions contemplated therein, nor the compliance by FNB
with any of the provisions thereof will (i) conflict with or result in a breach
of any provision of the Articles of Incorporation or Bylaws of FNB, (ii) except
as Previously Disclosed, constitute or result in the breach of any term,
condition or provision of, or constitute default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon, any property or assets of
the FNB Companies pursuant to (A) any note, bond, mortgage, indenture, or (B)
any material license, agreement, lease or other instrument or obligation, to
which any of the FNB Companies is a party or by which any of them or any of
their properties or assets may be bound, or (iii) subject to the receipt of the
requisite approvals referred to in Section 4.7, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to any of the FNB
Companies or any of their properties or assets.

(c) Capital Structure. The authorized capital stock of FNB consists
of: 10,000,000 shares of common stock, par value $5.00 per share ("FNB Common
Stock), of which 4,084,172 shares are issued and outstanding, fully paid and
nonassessable, not subject to shareholder preemptive rights, and not issued in
violation of any agreement to which FNB is a party or otherwise bound, or of any
registration or qualification provisions of any federal or state securities
laws. The shares of FNB Common Stock to be issued in exchange for shares of SWVA
Common Stock upon consummation of the Merger will have been duly authorized and,
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable and subject to no preemptive rights. Except
as Previously Disclosed, there are no outstanding understandings or commitments
of any character pursuant to which FNB and any of the FNB Companies could be
required or expected to issue shares of capital stock.

(d) Ownership of the FNB Subsidiaries; Capital Structure of FNB
Subsidiaries; and Organization of the FNB Subsidiaries. (1) FNB does not own,
directly or indirectly, 5% or more of the outstanding capital stock or other
voting securities of any corporation, bank or other organization actively
engaged in business except as Previously Disclosed. The outstanding shares of
capital stock of each FNB Subsidiary have been duly authorized and are validly
issued, and are fully paid and nonassessable and all such shares are owned by
FNB or an FNB Subsidiary free and clear of all liens, claims and encumbrances
and were not issued in violation of any agreement or of any regulation or
qualification provisions of federal or state securities laws. No rights are
authorized, issued or outstanding with respect to the capital stock of any FNB
Subsidiary and there are no agreements, understandings or commitments relating
to the right of FNB to vote or to dispose of said shares. None of the shares of
capital stock of any FNB Subsidiary has been issued in violation of the
preemptive rights of any person.

(2) Each FNB Subsidiary is a duly organized corporation or
association, validly existing and in good standing under applicable laws. Each
FNB Subsidiary (i) has full corporate power and authority to own, lease and
operate its

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<PAGE>

properties and to carry on its business as now conducted except where the
absence of such power or authority would not have a material adverse effect on
the financial condition, results of operations or business of FNB on a
consolidated basis, and (ii) is duly qualified to do business in the states of
the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification and where
failure to do qualify would have a material adverse effect on the financial
condition, results of operations or business of FNB on a consolidated basis.
Each FNB Subsidiary has all federal, state, local and foreign governmental
authorizations and licenses necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except where
failure to obtain such authorization or license would not have a material
adverse effect on the business of such FNB Subsidiary.

(e) Financial Statements. FNB's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, and all other documents filed or to be
filed subsequent to December 31, 1999 under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act"), in the form filed with the SEC (in
each such case, the "FNB Financial Statements") 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 made therein, in light of
the circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the FNB Financial Statements
(including the related notes and schedules thereto) fairly presents and will
fairly present the financial position of the entity or entities to which it
relates as of its date and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in the FNB
Financial Statements (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied to banks and bank holding companies during the periods
involved, except as may be noted therein, subject to normal and recurring year-
end audit adjustments in the case of unaudited statements.

(f) Absence of Undisclosed Liabilities. At December 31, 1999, and at
any subsequent date reflected in such Financial Statements, none of the FNB
Companies had any obligation or liability (contingent or otherwise) of any
nature which were not reflected in the FNB Financial Statements, except for
those which in the aggregate are immaterial or have been Previously Disclosed.

(g) Legal Proceedings; Compliance with Laws. Except as Previously
Disclosed, there are no actions, suits or proceedings instituted or pending or,
to the best knowledge of FNB, threatened or probable of assertion against any of
the FNB Companies, or against any property, asset, interest or right of any of
them, that are reasonably expected to have, either individually or in the
aggregate, a material adverse effect on the financial condition of FNB on a
consolidated basis or that are reasonably

20
<PAGE>

expected to threaten or impede the consummation of the transactions contemplated
by this Agreement. None of the FNB Companies is a party to any agreement or
instrument or subject to any judgment, order, writ, injunction, decree or rule
that might reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business or prospects of FNB on a
consolidated basis. Except as Previously Disclosed, as of the date of this
Agreement, none of the FNB Companies nor any of their 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, any
federal or state governmental agency or authority charged with the supervision
or regulation of depository institutions or mortgage lenders or engaged in the
insurance of deposits which restricts or purports to restrict in any material
respect the conduct of the business of it or any of its subsidiaries or
properties, or in any manner relates to the capital, liquidity, credit policies
or management of it; and except as Previously Disclosed, none of the FNB
Companies has been advised by any such regulatory authority that such 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 or similar submission. To the best knowledge of
FNB, the FNB Companies have complied in all material respects with all laws,
ordinances, requirements, regulations or orders applicable to its business
(including environmental laws, ordinances, requirements, regulations or orders).

(h) Regulatory Approvals. FNB knows of no reason why the regulatory
approvals referred to in Section 7.1(b) should not be obtained without the
imposition of any condition of the type referred to in Section 7.1(b). First
National is in material compliance with the applicable provisions of the
Community Reinvestment Act and the regulations promulgated thereunder, and First
National currently has a CRA rating of satisfactory or better. To the knowledge
of FNB, there is no fact or circumstance or set of facts or circumstances that
would cause First National to fail to comply with such provisions or cause the
rating of First National to fall below satisfactory.

(i) Labor Relations. None of the FNB Companies 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 it the subject of
a proceeding asserting that is has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel it to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it, pending or, to the
best of its knowledge, threatened, nor is it aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in any
other organizational activity.

(j) Tax Matters. The FNB Companies have filed all federal, state, and
local tax returns and reports required to be filed, and all taxes shown by such
returns to be due and payable have been paid or are reflected as a liability in
the FNB Financial Statements or are being contested in good faith and have been
Previously Disclosed. Except to the extent that liabilities therefor are
specifically reflected in the FNB Financial

21
<PAGE>

Statements, there are no federal, state or local tax liabilities of the FNB
Companies other than liabilities that have arisen since December 31, 1999, all
of which have been properly accrued or otherwise provided for on the books and
records of the FNB Companies. Except as Previously Disclosed, no tax return or
report of any of the FNB Companies is under examination by any taxing authority
or the subject of any administrative or judicial proceeding, and no unpaid tax
deficiency has been asserted against any of the FNB Companies by any taxing
authority.

(k) Property. Except as disclosed or reserved against in the FNB
Financial Statements, all of the FNB Companies have good and marketable title
free and clear of all material liens, encumbrances, charges, defaults or
equities of whatever character to all of the material properties and assets,
tangible or intangible, reflected in the FNB Financial Statements as being owned
by the FNB Companies as of the dates thereof. To the best knowledge of FNB, all
buildings, and all fixtures, equipment, and other property and assets which are
material to its business on a consolidated basis, held under leases or subleases
by the FNB Companies are held under valid instruments enforceable in accordance
with their respective terms, subject to bankruptcy, insolvency, merger,
moratorium and similar laws. The buildings, structures, and appurtenances owned,
leased, or occupied by the FNB Companies are, to the best knowledge of FNB, in
good operating condition, in a state of good maintenance and repair and (i)
comply with applicable zoning and other municipal laws and regulations, and (ii)
there are no latent defects therein.

(l) Reports. Since January 1, 1998, the FNB Companies have filed all
reports and statements, together with any amendments required to be made with
respect thereto, that were required to be filed with the SEC, the Federal
Reserve, the SCC, and any other governmental or regulatory authority or agency
having jurisdiction over their operations.

(m) Employee Benefit Plans. (1) FNB will deliver for SWVA's review,
as soon as practicable, true and complete copies of all material pension,
retirement, profit-sharing, deferred compensation, stock option, bonus, vacation
or other material incentive plans or agreements, all material medical, dental or
other health plans, all cafeteria or flexible benefits plans, all life insurance
plans and all other material employee benefit plans or fringe benefit plans and
any related trust or other funding instrument, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
FNB or any FNB Subsidiary for the benefit of current or former employees,
retirees or other beneficiaries eligible to participate (collectively, the "FNB
Benefit Plans"). Any of the FNB Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "FNB ERISA Plan." No FNB Benefit Plan is or has been a
"multiemployer plan," as defined in Section 3(37) of ERISA.

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<PAGE>

(2) Except as Previously Disclosed, all FNB Benefit Plans are in
compliance with the applicable terms of ERISA, the Internal Revenue Code of
1986, as amended (the "IRC") and any other applicable laws, rules and
regulations the breach or violation of which could result in a material
liability to FNB on a consolidated basis. In the case of any plan intended to be
qualified under IRC Section 401, compliance with such qualification requirements
shall mean the receipt of a current, favorable determination letter from the
Internal Revenue Service based on laws changes effective through 1994 and
operation of the plan in accordance with its terms or in accordance with any
subsequently enacted law for which the remedial amendment period has not yet
ended.

(3) No FNB ERISA Plan which is subject to the minimum funding
standards of Section 302 of ERISA or IRC Section 412 has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
present fair market value of the assets of any such plan which is a "defined
benefit plan," as that term is defined in Section 3(35) of ERISA, exceeds the
plan's "benefit liabilities," as that term is defined in Section 4001(a)(16) of
ERISA, when determined under actuarial factors that would apply if the plan was
terminated in accordance with all applicable legal requirements.

(n) Investment Securities. Except for pledges to secure public and
trust deposits and obligations under agreements pursuant to which any of the FNB
Companies has sold securities subject to an obligation to repurchase, none of
the investment securities reflected in the FNB Financial Statements is subject
to any restriction, contractual, statutory, or otherwise, which would impair
materially the ability of the holder of such investment to dispose freely of any
such investment at any time.

(o) Certain Contracts. (1) Except as Previously Disclosed, neither
FNB nor any FNB subsidiary is a party to, or is bound by, (i) any material
agreement, arrangement or commitment, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by FNB or any FNB Subsidiary or
the guarantee by FNB or any FNB Subsidiary of any such obligation, (iii) any
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election, retention in office or severance of any present or
former director or officer, (iv) any agreement to make loans or for the
provision, purchase or sale of goods, services or property between FNB or any
FNB Subsidiary and any director or officer of FNB or any FNB Subsidiary, or any
member of the immediate family or affiliate of any of the foregoing, or (v) any
agreement between FNB or any FNB Subsidiary and any 5% or more shareholder of
FNB; in each case other than agreements entered into in the ordinary course of
the banking business of FNB or a FNB Subsidiary consistent with past practice.

(2) Neither FNB or any FNB Subsidiary, nor to the knowledge of
FNB, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise, nor has there
occurred any event that, with the

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<PAGE>

lapse of time or giving of notice or both, would constitute such a default,
other than defaults of loan agreements by borrowers from FNB or a FNB Subsidiary
in the ordinary course of its business.

(p) Insurance. A complete list of all policies or binders of fire,
liability, product liability, workmen's compensation, vehicular and other
insurance held by or on behalf of the FNB Companies has previously been
furnished to SWVA and all such policies or binders are valid and enforceable in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to the extent and in the manner customary for the industry
and are deemed appropriate and sufficient by FNB. The FNB Companies are not in
default with respect to any provision contained in any such policy or binder and
have not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion. None of the FNB Companies has received notice
of cancellation or non-renewal of any such policy or binder. None of the FNB
Companies has knowledge of any inaccuracy in any application for such policies
or binders, any failure to pay premiums when due or any similar state of facts
or the occurrence of any event that is reasonably likely to form the basis for
any material claim against it not fully covered (except to the extent of any
applicable deductible) by the policies or binders referred to above. None of the
FNB Companies has received notice from any of its insurance carriers that any
insurance premiums will be increased materially in the future or that any such
insurance coverage will not be available in the future on substantially the same
terms as now in effect.

(q) Loans, OREO, and Allowance for Loan Losses. (1) Except as
Previously Disclosed, and except for matters which individually or in the
aggregate, do not materially adversely affect the Merger or the financial
condition of FNB, to FNB's best knowledge each loan reflected as an asset in the
FNB Financial Statements or the financial statements of any FNB Subsidiary (i)
is evidenced by notes, agreements, or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency, and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. All loans and extensions of credit which are
subject to regulation of the Federal Reserve which have been made by FNB and the
FNB Subsidiaries comply therewith.

(2) The classification on the books and records of FNB and each
FNB Subsidiary of loans and/or non-performing assets as nonaccrual, troubled
debt restructuring, OREO or other similar classification, complies in all
material respects with generally accepted accounting principles and applicable
regulatory accounting principles.

(3) Except for liens, security interests, claims, charges, or
such other encumbrances as have been appropriately reserved for in the FNB
Financial Statements or are not material, title to the OREO is good and
marketable, and there are no

24
<PAGE>

adverse claims or encumbrances on the OREO. All title, hazard and other
insurance claims and mortgage guaranty claims with respect to the OREO have been
timely filed and neither FNB nor any FNB Subsidiary has been received any notice
of denial of any such claim.

(4) FNB and each FNB Subsidiary are in possession of all of the
OREO or, if any of the OREO remains occupied by the mortgagor, eviction or
summary proceedings have been commenced or rental arrangements providing for
market rental rates have been agreed upon and FNB and/or each FNB Subsidiary are
diligently pursuing such eviction of summary proceedings or such rental
arrangements. Except as Previously Disclosed, no legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of FNB and each FNB Subsidiary,
threatened concerning any OREO or any servicing activity or omission to provide
a servicing activity with respect to any of the OREO.

(5) Except as Previously Disclosed, all loans made by any of the
FNB Companies to facilitate the disposition of OREO are performing in accordance
with their terms.

(6) The allowance for possible loan losses shown on the FNB
Financial Statements was, and the allowance for possible loan losses shown on
the financial statements of FNB as of dates subsequent to the execution of this
Agreement will be, in each case as of the dates thereof, adequate in all
material respects to provide for possible losses, net of recoveries relating to
loans previously charged off, on loans outstanding (including accrued interest
receivable) of the FNB Companies and other extensions of credit (including
letters of credit and commitments to make loans or extend credit) by FNB.

(r) Absence of Material Changes and Events. Since December 31, 1999,
there has not been any material adverse change in the condition (financial or
otherwise), aggregate assets or liabilities, cash flow, earnings or business or
FNB, and FNB has conducted its business only in the ordinary course consistent
with past practice.

(s) Statements True and Correct. None of the information supplied or
to be supplied by FNB for inclusion in the Registration Statement, the Proxy
Statement/Prospectus or any other document to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and, in the case of the
Registration Statement, when it becomes effective and with respect to the Proxy
Statement/Prospectus, when first mailed to SWVA shareholders, be false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements therein not misleading, or, in the
case of the Proxy Statement/Prospectus or any supplement thereto, at the time of
the SWVA Shareholders' Meeting, be false or misleading with respect to any
material fact or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the SWVA Shareholders' Meeting. All documents that FNB is responsible
for filing with the SEC or

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<PAGE>

any other regulatory authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of federal and state securities
law.

(t) Brokers and Finders. Neither FNB nor any FNB Subsidiary, nor any
of their respective officers, directors or employees, has employed any broker,
finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, except for
The Carson Medlin Company.

(u) Repurchase Agreements. With respect to all agreements pursuant to
which FNB or any FNB Subsidiary has purchased securities subject to an agreement
to resell, if any, FNB or such FNB Subsidiary, as the case may be, has a valid,
perfected first lien or security interest in the government securities or other
collateral securing the repurchase agreement, and the value of such collateral
equals or exceeds the amount of the debt secured thereby.

(v) Administration of Trust Accounts. FNB and FNB Subsidiaries have
properly administered, in all respects material and which could reasonably be
expected to be material to the business, operations or financial condition of
FNB and FNB Subsidiaries, taken as a whole, all accounts for which they act as
fiduciaries including but not limited to accounts for which they serve as
trustees, agents, custodians, personal representatives, guardians, conservators
or investment advisors, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law. Neither FNB
nor a FNB Subsidiary, nor any director, officer or employee of FNB or a FNB
Subsidiary has committed any breach of trust with respect to any such fiduciary
account which is material to or could reasonably be expected to be material to
the business, operations or financial condition of FNB, or a FNB Subsidiary,
taken as a whole, and the accountings for each such fiduciary account are true
and correct in all material respects and accurately reflect the assets of such
fiduciary account in all material respects.

(w) Environmental Matters. (1) Except as Previously Disclosed, to the
best of FNB's knowledge, neither FNB nor any FNB Subsidiary owns or leases any
properties affected by toxic waste, radon gas or other hazardous conditions or
constructed in part with the use of asbestos. Each of FNB and the FNB
Subsidiaries is in substantial compliance with all Environmental Laws applicable
to real or personal properties in which it has a direct fee ownership or, with
respect to a direct interest as lessee, applicable to the leasehold premises or,
to the best knowledge of FNB and the FNB Subsidiaries, the premises on which the
leasehold is situated. Neither FNB nor any FNB Subsidiary has received any
Communication alleging that FNB or such FNB Subsidiary is not in such compliance
and, to the best knowledge of FNB and the FNB Subsidiaries, there are no present
circumstances (including Environmental Laws that have been adopted but are not
yet effective) that would prevent or interfere with the continuation of such
compliance.

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<PAGE>

(2) There are no legal, administrative, arbitral or other
claims, causes of action or governmental investigations of any nature, seeking
to impose, or that could result in the imposition, on FNB and the FNB
Subsidiaries of any liability arising under any Environmental Laws pending or,
to the best knowledge of FNB and the FNB Subsidiaries, threatened against (A)
FNB or any FNB Subsidiary, (B) any person or entity whose liability for any
Environmental Claim, FNB or any FNB Subsidiary has or may have retained or
assumed either contractually or by operation of law, or (C)any real or personal
property which FNB or any FNB Subsidiary owns or leases, or has been or is
judged to have managed or to have supervised or participated in the management
of, which liability might have a material adverse effect on the business,
financial condition or results of operations of FNB. FNB and the FNB
Subsidiaries are not subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.

(3) To the best knowledge of FNB and the FNB Subsidiaries, there
are no legal, administrative, arbitral or other proceedings, or Environmental
Claims or other claims, causes of action or governmental investigations of any
nature, seeking to impose, or that could result in the imposition, on FNB or any
FNB Subsidiary of any liability arising under any Environmental Laws pending or
threatened against any real or personal property in which FNB or any FNB
Subsidiary holds a security interest in connection with a loan or a loan
participation which liability might have a material adverse effect on the
business, financial condition or results of operations of FNB. FNB and the FNB
Subsidiaries are not subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.

(4) With respect to all real and personal property owned or
leased by FNB or any FNB Subsidiary, other than OREO, FNB has made available to
SWVA copies of any environmental audits, analyses and surveys that have been
prepared relating to such properties. With respect to all OREO held by FNB or
any FNB Subsidiary and all real or personal property which FNB or any FNB
Subsidiary has been or is judged to have managed or to have supervised or
participated in the management of, FNB has made available to SWVA the
information relating to such OREO available to FNB. FNB and the FNB Subsidiaries
are in compliance in all material respects with all recommendations contained in
any environmental audits, analyses and surveys relating to any of the
properties, real or personal, described in this subsection (4).

(5) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Laws currently in
effect or adopted but not yet effective against FNB or any FNB Subsidiary or
against any person or entity whose liability for any Environmental Claim FNB or
any FNB Subsidiary has or may have retained or assumed either contractually or
by operation of law.

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<PAGE>

ARTICLE 5
Conduct Prior to the Effective Date

5.1 Access to Records and Properties. SWVA will keep FNB, and FNB will
keep SWVA advised of all material developments relevant to their respective
businesses prior to consummation of the Merger. Prior to the Effective Date,
FNB, on the one hand, and SWVA on the other, agree to give to the other party
reasonable access to all the premises and books and records (including tax
returns filed and those in preparation) of it and its subsidiaries and to cause
its officers to furnish the other with such financial and operating data and
other information with respect to the business and properties as the other shall
from time to time request for the purposes of verifying the warranties and
representations set forth herein; provided, however, that any such investigation
shall be conducted in such manner as not to interfere unreasonably with the
operation of the respective business of the other.

5.2 Confidentiality. Between the date of this Agreement and the Effective
Date, FNB and SWVA each will maintain in confidence, and cause its directors,
officers, employees, agents and advisors to maintain in confidence, and not use
to the detriment of the other party, any written, oral or other information
obtained in confidence from the other party or a third party in connection with
this Agreement or the transactions contemplated hereby unless such information
is already known to such party or to others not bound by a duty of
confidentiality or unless such information becomes publicly available through no
fault of such party, unless use of such information is necessary or appropriate
in making any filing or obtaining any consent or approval required for the
consummation of the transactions contemplated hereby or unless the furnishing or
use of such information is required by or necessary or appropriate in connection
with legal proceedings. If the Merger is not consummated, each party will return
or destroy as much of such written information as may reasonably be requested.

5.3 Registration Statement, Proxy Statement and Shareholder Approval. The
Board of Directors of SWVA will duly call and will hold a meeting of its
shareholders as soon as practicable for the purpose of approving the Merger (the
"SWVA Shareholders' Meeting") and, subject to the fiduciary duties of the Board
of Directors of SWVA (as determined after consultation with its counsel and as
presented in writing), SWVA shall use its best efforts to solicit and obtain
votes of the holders of its Common Stock in favor of the Merger and will comply
with the provisions in its Articles of Incorporation and Bylaws relating to the
call and holding of a meeting of shareholders for such purpose; and SWVA shall,
at its own discretion, recess or adjourn the meeting if such recess or
adjournment is deemed by SWVA to be necessary or desirable. FNB and SWVA agree
to cooperate in the preparation of the Registration Statement to be filed by FNB
with the SEC (the "Registration Statement") in connection with the issuance of
FNB Common Stock in the Merger, including the proxy statement and other proxy
material of SWVA constituting a part thereof (the "Proxy Statement"), and FNB
will use its best efforts to have the Registration Statement declared effective
as promptly as possible. When the Registration Statement or any post-effective
amendment or

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<PAGE>

supplement thereto shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the SWVA Shareholders' Meeting,
such Registration Statement and all amendments or supplements thereto, with
respect to all information set forth therein furnished or to be furnished by
SWVA relating to the SWVA Companies and by FNB relating to the FNB Companies,
(i) will comply in all material respects with the provisions of the Securities
Act of 1933 and any other applicable statutory or regulatory requirements,
including applicable state blue-sky and securities laws, and (ii) 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 contained
therein not misleading; provided, however, in no event shall any party hereto be
liable for any untrue statement of a material fact or omission to state a
material fact in the Registration Statement made in reliance upon, and in
conformity with, written information concerning another party furnished by such
other party specifically for use in the Registration Statement.

5.4 Operation of the Business of FNB and SWVA. From the date hereof to the
Effective Date, FNB and SWVA will operate their respective businesses
substantially as presently operated and only in the ordinary course, and,
consistent with such operation, they will use their best efforts to preserve
intact their relationships with persons having business dealings with them.
Without limiting the generality of the foregoing, and except as provided in
Section 5.12, neither FNB nor SWVA will, without the prior written consent of
the other, which consent shall not be unreasonably withheld:

(a) Make any change in its authorized capital stock, or issue or sell
any additional shares of, securities convertible into or exchangeable for, or
options (excluding those options provided for in the 2000 FNB Corporation
Incentive Stock Compensation Plan, but the number of such options to be issued
shall not exceed 50,000), warrants or rights to purchase, its capital stock, nor
shall it purchase, redeem or otherwise acquire any of its outstanding shares of
capital stock, provided that FNB or SWVA may issue shares of common stock
pursuant to options granted or issued prior to the date hereof and FNB may
repurchase FNB Common Stock consistent with past practices;

(b) Voluntarily make any changes in the composition of its officers,
directors or other key management personnel;

(c) Make any change in the compensation or title of any officer,
director or key management employee or make any change in the compensation or
title of any other employee, other than permitted by current employment policies
in the ordinary course of business, any of which changes shall be reported
promptly to the other party provided, however, that on or before the Effective
Date, SWVA may extend the term of the employment agreements of D. W. Shilling
and Barbara Weddle for terms not to exceed 36 months and 12 months from the
Effective Date, respectively;

(d) Enter into any bonus, incentive compensation, stock option,
deferred compensation, profit sharing, thrift, retirement, pension, group
insurance or

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<PAGE>

other benefit plan or any employment or consulting agreement (excluding calendar
year bonuses and 2001 Sales Incentives consistent with past practice);

(e) Incur any obligation or liability (whether absolute or
contingent, excluding suits instituted against it), make any pledge, or encumber
any of its assets, nor dispose of any of its assets in any other manner, except
in the ordinary course of its business and for adequate value, or as otherwise
specifically permitted in this Agreement, and excluding FHLB borrowings
consistent with past practice;

(f) Except as permitted by Section 5.4(a) hereof, issue or contract
to issue any shares of its Common Stock, options for shares of its Common Stock,
or securities exchangeable for or convertible into such shares;

(g) Knowingly waive any right to substantial value;

(h) Enter into material transactions otherwise than in the ordinary
course of its business;

(i) Alter, amend or repeal its Bylaws or Articles of Incorporation
(excluding any amendment with respect to SVSB in order to add one director to
SVSB's Board); or

(j) Propose or take any other action which would make any
representation or warranty in Section 4.1 or Section 4.2 hereof untrue.

5.5 Dividends. FNB and SWVA may declare and pay only regular periodic cash
dividends in the ordinary course of business and consistent with past practice
from the date of this Agreement through the Effective Date. Any dividend
increase by SWVA or FNB in excess of $.01 per share must be approved by the
other.

5.6 No Solicitation. Without the prior written consent of FNB, SWVA shall
not, and shall cause its officers, directors, agents, advisors and affiliates
not to, solicit or encourage inquires or proposals with respect to, furnish any
information relating to, or participate in any negotiations or discussions
concerning, an Acquisition Transaction (as hereinafter defined); provided,
however, that nothing contained in this Section 5.6 shall prohibit the Board of
Directors of SWVA from furnishing information to, or entering into discussions
or negotiations with, any person or entity that makes an unsolicited, written
bona fide proposal regarding an Acquisition Transaction if, and only to the
extent that (A) the Board of Directors of SWVA concludes in good faith, after
consultation with and consideration of the written advice of outside counsel,
that the failure to furnish such information or enter into such discussions or
negotiations would constitute a breach of its fiduciary duties to shareholders
under applicable law, and (B) the Board of Directors of SWVA concludes in good
faith that the proposal regarding the Acquisition Transaction contains an offer
of consideration that is superior to the consideration set forth herein. SWVA
shall immediately notify FNB orally and in writing of its receipt of any such
proposal or inquiry, of the material terms and conditions thereof, and, if
possible, of the

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<PAGE>

identity of the person making such proposal or inquiry. For purposes of this
Agreement, "Acquisition Transaction" means any merger, consolidation, share
exchange, joint venture, business combination or similar transaction or any
purchase of all or any material portion of the assets of an entity.

5.7 Regulatory Filings. FNB and SWVA shall prepare jointly all regulatory
filings required to consummate the transactions contemplated by the Agreement
and the Plan of Merger and submit the filings for approval with the Federal
Reserve Board and the SCC, and any other governing regulatory authority, as soon
as practicable after the date hereof. FNB and SWVA shall use their best efforts
to obtain approvals of such filings.

5.8 Public Announcements. Each party will consult with the other before
issuing any press release or otherwise making any public statements with respect
to the Merger and shall not issue any such press release or make any such public
statement prior to such consultations except as may be required by law.

5.9 Notice of Breach. FNB and SWVA will give written notice to the other
promptly upon becoming aware of the impending or threatened occurrence of any
event which would cause or constitute a breach of any of the representations,
warranties or covenants made to the other party in this Agreement and will use
its best efforts to prevent or promptly remedy the same.

5.10 Accounting Treatment. FNB and SWVA acknowledge that the Merger shall
be accounted for as a purchase under generally accepted accounting principles.

5.11 Merger Consummation. Subject to the terms and conditions of this
Agreement, each party shall use its best efforts in good faith to take, or cause
to be taken, all actions, and to do or cause to be done all things necessary,
proper or desirable, or advisable under applicable laws, as promptly as
practicable so as to permit consummation of the Merger at the earliest possible
date, consistent with Section 1.5 herein, and to otherwise enable consummation
of the transactions contemplated hereby and shall cooperate fully with the other
parties hereto to that end, and each of FNB and SWVA shall use, and shall cause
each of their respective subsidiaries to use, its best efforts to obtain all
consents (governmental or other) necessary or desirable for the consummation of
the transactions contemplated by this Agreement.

5.12 FNB Acquisition Transaction. Nothing contained in this Agreement shall
prevent FNB from entering into an Acquisition Transaction with a third party so
long as FNB and its successors comply with the terms of the Merger with SWVA.

5.13 Affiliate Agreements. SWVA shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" of SWVA under
Rule 145 of the Securities Act to deliver to FNB as soon as practicable, and
prior to the mailing of the Proxy Statement/Prospectus, executed letter
agreements in the form of

31
<PAGE>

Exhibit C attached hereto providing that such person will comply with Rule 145
and will vote in favor of the Merger.

ARTICLE 6
Additional Agreements

6.1 Conversion of Stock Options. (a) On the Effective Date, all rights
with respect to SWVA Common Stock pursuant to stock options ("SWVA Options")
granted by SWVA under a SWVA stock option plan which are outstanding on the
Effective Date, whether or not they are exercisable, shall be converted into and
become rights with respect to FNB Common Stock, and FNB shall assume each SWVA
Option in accordance with the terms of the stock option plan under which it was
issued and the stock option agreement by which it is evidenced. From the
Effective Date forward, (i) each SWVA Option assumed by FNB may be excised
solely for shares of FNB Common Stock, (ii) the number of shares of FNB Common
Stock subject to each SWVA Option shall be equal to the number of shares of SWVA
Common Stock subject to such option immediately prior to the Effective Date
multiplied by the Exchange Ratio and (iii) the per share exercise price under
each such SWVA Option shall be adjusted by dividing the per share exercise price
under each such option by the Exchange Ratio and rounding down to the nearest
cent; provided, however, that the terms of each SWVA Option shall, in accordance
with its terms, be subject to further adjustment as appropriate to reflect any
stock split, stock dividend, recapitalization or other similar transaction after
the Effective Date. It is intended that the foregoing assumption shall be
undertaken in a manner that will not constitute a "modification" as defined in
Section 425 of the Code, as to any stock option which is an "incentive stock
option." Shares of FNB Common Stock issuable upon exercise of SWVA Options shall
be covered by an effective registration statement on Form S-8, and FNB shall use
its reasonable best efforts to file a registration statement on Form S-8
covering such shares as soon as possible after the Effective Date, but in no
event, no later than 30 days after the Effective Date.

6.2 Benefit Plans.

(a) Effective with the consummation of the Merger, the Management
Stock Bonus Plan of SVSB shall be terminated and all unawarded shares (and the
Merger Consideration attributable thereto) shall be forfeited to SVSB. In
addition, the SVSB ESOP (as defined in Section 6.2(c)) shall be continued and
then merged as provided Section 6.2(c) below, the SVSB Defined Benefit Plan (as
defined in Section 6.2(d)) shall be continued and then terminated as provided
Section 6.2(d) below, and participation in the FNB 401(k) plan shall be made
available to SVSB employees as provided Section 6.2(e) below. Otherwise, after
consummation of the Merger, at the option of FNB (which may be applied on a plan
or program by plan or program basis) and subject to FNB's best efforts,
employees of SWVA and SVSB shall be entitled to participate either (x) in one or
more combined plans or programs of FNB and SWVA on substantially the same basis
as similarly situated employees of FNB or First National (taking into account
all applicable factors, including but not limited to position, employment
classification, age, length of service, pay, part time or full time status, and
the like, as well as changes made in such

32
<PAGE>

plans and programs in the future), or (y) in plans and programs which, subject
to changes required by applicable laws or by limitations imposed by insurance
companies providing plan benefits, are comparable to (or a continuation of), and
provide for participation on substantially the same basis, as SWVA's employee
benefit plans and programs currently in effect. If and to the extent option (x)
is effectuated:

(1) (A) Coverage under FNB's plans and programs shall be
available to each employee of SWVA and SVSB and his or her dependents without
regard to any waiting period, evidence or requirement of insurability, actively
at work requirement or preexisting condition exclusion or limitation (except to
the extent and in the manner any such waiting period, evidence or requirement of
insurability, actively at work requirement or exclusion or limitation applies to
such employee or dependents immediately prior to the effectuation of option (x))
and (B) amounts paid or payable by employees for health care expenses for the
portion of the annual benefit period prior to the date as of which option (x)
becomes effective shall be credited in satisfaction of any deductible
requirement and any out-of-pocket limit for the balance of the annual benefit
period which includes such date.

(2) FNB shall treat service with SWVA and SVSB before the
consummation of the Merger as service with FNB for purposes of eligibility to
begin participation and vesting (but not benefit accruals, except in the case of
a continuation of any plan maintained by SWVA or SVSB) for purposes of all
employee benefit and seniority based plans and programs, including but not
limited to annual, sick and personal leave accruing following the consummation
of the Merger.

Nothing contained in this Section is intended to provide any third party
beneficiary rights in any current or former employee, or any spouse or dependent
thereof, of SWVA, SVSB, FNB or any FNB Subsidiary, except as otherwise required
by ERISA or other applicable law (determined without regard to third party
beneficiary contract law).

(b) Except to extent individually negotiated replacement contracts or
settlement agreements are entered into, FNB shall honor all employment
severance, consulting and other compensation contracts and agreements Previously
Disclosed and executed in writing by SWVA on the one hand and any individual
current or former director, officer or employee thereof on the other hand,
copies of which have been previously delivered by SWVA to FNB.

(c) As of the Effective Date, all SWVA and SVSB employees who are
participants in the SVSB Employee Stock Ownership Plan (the "SVSB ESOP") shall
be fully vested in their accrued benefits under the SVSB ESOP, and the SVSB ESOP
shall be continued and shall be merged into the FNB Employee Stock Ownership
Plan no later than two years after the Merger, with participation in the FNB
Employee Stock Ownership Plan extended to eligible employees of SVSB as of the
time of such plan merger. FNB shall treat service with SWVA and SVSB before the
consummation of the Merger as service with FNB for purposes of eligibility to
begin participation, vesting and future benefit accrual under its Employee Stock
Ownership Plan.

33
<PAGE>

(d) As of the Effective Date, all SWVA and SVSB employees who are
participants in the SWVA defined benefit plan maintained through the Financial
Institutions Retirement Fund (the "SWVA Defined Benefit Plan") shall be fully
vested in their accrued benefits under the SWVA Defined Benefit Plan, and all
necessary steps shall be taken to cause the SWVA Defined Benefit Plan to be
terminated no later than the end of its plan year in which the Merger occurs, in
accordance with applicable law. If the SWVA Defined Benefit Plan is fully
funded on termination, any funding surplus shall be used to increase accrued
benefits on a basis which is nondiscriminatory under the IRC in a manner
mutually agreeable to FNB, SWVA and SVSB.

(e) Effective no later than the beginning of the first plan year of
FNB's 401(k) plan commencing after the effective date of the termination of the
SWVA Defined Benefit Plan, FNB shall make participation in its 401(k) plan
available to the eligible employees of SWVB. FNB shall treat service with SWVA
and SVSB before the consummation of the Merger as service with FNB for purposes
of eligibility to begin participation, vesting and future benefit accrual under
its 401(k) plan.

6.3 Indemnification. Following the Effective Date, FNB shall indemnify and
hold harmless any person who has rights to indemnification from SWVA, to the
maximum extent permitted under Virginia law and in accordance with SWVA's
Articles of Incorporation or Bylaws, as in effect on the date of this Agreement,
to the extent legally permitted to do so, with respect to matters occurring on
or prior to the Effective Date. FNB further agrees that any such person who has
rights to indemnification pursuant to this Section 6.3 is expressly made a third
party beneficiary of this Section 6.3 and may directly, in such person's
personal capacity, enforce such rights through an action at law or in equity or
through any other manner or means of redress allowable under Virginia law to the
same extent as if such person were a party hereto. Without limiting the
foregoing, in any case in which corporate approval may be required to effectuate
any indemnification, FNB shall direct, at the election of the party to be
indemnified, that the determination of permissibility of indemnification shall
be made by independent counsel mutually agreed upon between FNB and the
indemnified party. Upon written application, and in accordance with, and to the
extent permitted by, Virginia law, FNB will advance reasonable expenses to any
person who has rights to indemnification from SWVA. FNB shall use its reasonable
best efforts to maintain SWVA's existing directors' and officers' liability
policy, or some other policy, including FNB's existing policy, providing at
least comparable coverage, covering persons who are currently covered by such
insurance of SWVA for a period of six years after the Effective Date on terms no
less favorable than those in effect on the date hereof.

ARTICLE 7
Conditions to the Merger

7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each of FNB and SWVA to effect the Merger and the
other

34
<PAGE>

transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver at or prior to the Effective Date of the following conditions :

(a) Shareholder Approval. Shareholders of SWVA shall have approved
all matters relating to this Agreement and the Merger required to be approved by
such shareholders in accordance with Virginia law.

(b) Regulatory Approvals. This Agreement and the Plan of Merger shall
have been approved by the Federal Reserve, the SCC, the Office of Thrift
Supervision and any other regulatory authority whose approval is required for
consummation of the transactions contemplated hereby, and such approvals shall
not have imposed any condition or requirement which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement as to render inadvisable the consummation of the
Merger in the reasonable opinion of the Board of Directors of FNB or SWVA.

(c) Registration Statement. The Registration Statement shall have
been declared effective and shall not be subject to a stop order or any
threatened stop order.

(d) Tax Opinion. FNB and SWVA shall have received an opinion of Mays
& Valentine, L.L.P., or other counsel reasonably satisfactory to FNB and SWVA,
to the effect that the Merger will constitute a merger within the meaning of
Section 368 of the Internal Revenue Code and that no gain or loss will be
recognized by the shareholders of SWVA to the extent they receive FNB Common
Stock solely in exchange for their SWVA Common Stock in the Merger.

(e) Opinions of Counsel. SWVA shall have delivered to FNB and FNB
shall have delivered to SWVA opinions of counsel, dated as of the Effective
Date, as to such matters as they may each reasonably request with respect to the
transactions contemplated by this Agreement and in a form reasonably acceptable
to each of them.

(f) Legal Proceedings. Neither FNB nor SWVA shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger.

(g) Amendment of SVSB ESOP. Prior to Merger, SVSB shall have amended
the SVSB ESOP (as defined in Section 6.2(c)) to eliminate the provision thereof
(i.e., section 8.2(c)) requiring satisfaction of any acquisition loan,
allocation to participants of the remaining value of collateral not used to
satisfy any acquisition loan, and termination of such plan on the consummation
of a transaction such as the Merger.

7.2 Conditions to Obligations of FNB. The obligations of FNB to effect the
Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Date of the following additional conditions:

35
<PAGE>

(a) Representations and Warranties. Each of the representations and
warranties contained herein of SWVA shall be true and correct in all material
respects as of the date of this Agreement and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective Date, except (i) for any such representations and warranties made
as of a specified date, which shall be true and correct as of such date, (ii) as
expressly contemplated by this Agreement, or (iii) for representations and
warranties the inaccuracies of which relate to matters that, individually or in
the aggregate, do not materially adversely affect the Merger and the other
transactions contemplated by this Agreement and FNB shall have received a
certificate or certificates signed by the Chief Executive Officer and Chief
Financial Officer of SWVA dated the Effective Date, to such effect.

(b) Performance of Obligations. SWVA shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and FNB shall have received a certificate
signed by the Chief Executive Officer of SWVA to that effect.

7.3 Conditions to Obligations of SWVA. The obligations of SWVA to effect
the Merger shall be subject to the fulfillment or waiver at or prior to the
Effective Date of the following additional conditions:

(a) Representations and Warranties. Each of the representations and
warranties contained herein of FNB shall be true and correct in all material
respects as of the date of this Agreement and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective date, except (i) for any such representations and warranties made
as of a specified date, which shall be true and correct as of such date, (ii) as
expressly contemplated by this Agreement, or (iii) for representations and
warranties the inaccuracies of which relate to matters that, individually or in
the aggregate, do not materially adversely affect the Merger and the other
transactions contemplated by this Agreement and SWVA shall have received a
certificate or certificates signed by the Chief Executive Officer and Chief
Financial Officer of FNB dated the Effective Date, to such effect.

(b) Performance of Obligations. FNB shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Date, and SWVA shall have received a
certificate signed by Chief Executive Officer of FNB to that effect.

(c) Investment Banking Letter. SWVA shall have received a written
opinion in form and substance satisfactory to SWVA from RP Financial addressed
to SWVA and dated the date the Proxy Statement/Prospectus is mailed to
shareholders of SWVA, to the effect that the terms of the Merger, including the
Exchange Ratio, are fair, from a financial point of view, to SWVA.

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<PAGE>

ARTICLE 8
Termination

8.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement and the Plan of Merger by the
shareholders of SWVA, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Date:

(a) By the mutual consent of the Board of Directors of each of FNB
and SWVA;

(b) By the respective Boards of Directors of FNB or SWVA if the
conditions set forth in Section 7.1 have not been met or waived by FNB and SWVA;

(d) By the Board of Directors of SWVA if the conditions set forth in
Section 7.3 have not been met or waived by SWVA;

(e) By the respective Boards of Directors FNB or SWVA if the Merger
is not consummated by June 1, 2001.

(f) By the Board of Directors of SWVA, within five business days
after the end of the Measurement Period (as defined in Section 2.1), if the
Market Value (as defined in Section 2.1) is less than $14.00; provided, however,
that if within five calendar days after receipt of notice of termination
pursuant to this paragraph 8.1(f), FNB provides written notice to SWVA that it
shall increase the Exchange Ratio to an amount (rounded to the nearest one-
thousandth) so as to provide the same Stock Consideration that would be received
were the Market Value equal to $14.00 per share, in which case no termination
shall be deemed to have occurred pursuant to this Section 8.1(f) and this
Agreement shall remain in full force and effect in accordance with its terms
(except the Exchange Ratio shall have been so modified).

(g) By the Board of Directors of FNB, within five business days after
the end of the Measurement Period (as defined in Section 2.1), if the Market
Value (as defined in Section 2.1) is greater than $20.00; provided, however,
that if within five calendar days after receipt of notice of termination
pursuant to this paragraph 8.1(g), SWVA provides written notice to FNB that it
will agree to decrease the Exchange Ratio to an amount (rounded to the nearest
one-thousandth) so as to provide the same Stock Consideration that would be
received were the Market Value equal to $20.00 per share, in which case no
termination shall be deemed to have occurred pursuant to this Section 8.1(g) and
this Agreement shall remain in full force and effect in accordance with its
terms (except the Exchange Ratio shall have been so modified); and further
provided, however, that (i) if the Market Value (as defined in Section 2.1) is
greater than $20.00, and (ii) FNB shall have, prior to the Effective Date of the
Merger, publicly announced

37
<PAGE>

that it has agreed to a transaction in which control of FNB will be acquired by
another entity in an Acquisition Transaction, the Board of Directors of FNB may
not terminate the Merger pursuant to this Section 8.1(g) and the Exchange Ratio
shall be 1.083.

8.2 Effect of Termination. In the event of the termination and abandonment
of this Agreement and the Merger pursuant to Section 8.1, this Agreement shall
become void and have no effect, except that (i) the last sentence of Section 5.2
and all of Sections 5.8 and 8.4 shall survive any such termination and
abandonment and (ii) no party shall be relieved or released from any liability
arising out of an intentional breach of any provision of this Agreement.

8.3 Non-Survival of Representations, Warranties and Covenants. Except for
Sections 1.3, 1.4, Article 2, Article 3, 5.4(c), 6.2, 6.3 and 8.4 of this
Agreement, none of the respective representations and warranties, obligations,
covenants and agreements of the parties shall survive the Effective Date,
provided that no such representations, warranties, obligations, covenants and
agreements shall be deemed to be terminated or extinguished so as to deprive FNB
or SWVA (or any director, officer, or controlling person thereof) of any defense
in law or equity which otherwise would be available against the claims of any
person, including without limitation any shareholder or former shareholder of
either FNB or SWVA.

8.4 Expenses. The parties provide for the payment of expenses as follows:

(a) Except as provided below, each of the parties shall bear and pay
all costs and expenses incurred by it in connection with the transactions
contemplated herein, including fees and expenses of its own financial
consultants, accountants and counsel, except that printing expenses shall be
shared equally between FNB and SWVA.

(b) In the event FNB terminates this Agreement based on the
occurrence of a Termination Event (as defined below), SWVA shall pay to FNB a
termination fee of Two Hundred Fifty Thousand Dollars ($250,000.00) in cash
within five business days after written notice of such termination. For the
purposes of this Agreement, a "Termination Event" shall mean any of the
following events or transactions occurring after the date hereof:

(i) SWVA, without having received FNB's prior written consent,
shall have entered into an agreement with any person to (A) acquire,
merger or consolidate, or enter into any similar transaction, with
SWVA, (B) purchase, lease or otherwise acquire all or substantially
all of the assets of SWVA, or (C) purchase or otherwise acquire
directly from SWVA securities representing 10% or more of the voting
power of SWVA;

(ii) any person shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 20% or more of the
outstanding shares of SWVA Common Stock after the date hereof (the
term "beneficial ownership" for purposes of this Agreement having the

38
<PAGE>

meaning assigned thereto in Section 13(d) of the Exchange Act, and the
regulations promulgated thereunder); or

(iii) any person shall have made a bona fide proposal to SWVA by
public announcement or written communication that is or becomes the
subject of public disclosure to acquire SWVA by merger, shares
exchange, consolidation, purchase of all or substantially all of its
assets or any other similar transaction, and following such bona fide
proposal the shareholders of SWVA vote not to approve the Agreement.

Notwithstanding the foregoing, SWVA shall not be obligated to pay to FNB the
termination fee described in this Section 8.4(b) in the event that at or prior
to such time as such fee becomes payable (i) FNB and SWVA validly terminate this
Agreement pursuant to Section 8.1(a), (ii) FNB or SWVA validly terminates this
Agreement pursuant to Sections 8.1(b) [other than as a result of such
Termination Event], 8.1(c) [other than as a result of such Termination Event],
8.1(d) [other than as a result of such Termination Event] or 8.1(e) [other than
as a result of such Termination Event]. Upon payment of the termination fee and
any other amounts that may be due by SWVA to FNB hereunder, this Agreement shall
terminated as provided in Section 8.2.

(c) If this Agreement is terminated by FNB or SWVA because of a
willful and material breach by the other of any representation, warranty,
covenant, undertaking or restriction set forth herein, and provided that the
terminating party shall not have been in breach (in any material respect) of any
representation and warranty, covenant, undertaking or restriction contained
herein, then the breaching party shall bear and pay all such reasonable and
documented costs and expenses of the other party actually incurred, including
fees and expenses of consultants, investment bankers, accountants, counsel,
printers, and persons involved in the transactions contemplated by this
Agreement, including the preparation of the Registration Statement and the Joint
Proxy Statement.

(d) Except for the payment of the termination fee which shall be paid
as required by Section 8.4(b), final settlement with respect to the payment of
other fees and expenses by the parties shall be made within thirty (30) days
after the termination of this Agreement.

ARTICLE 9
General Provisions

9.1 Entire Agreement. This Agreement contains the entire agreement among
FNB and SWVA with respect to the Merger and the related transactions and
supersedes all prior arrangements or understandings with respect thereto.

9.2 Waiver and Amendment. Any term or provision of this Agreement may be
waived in writing at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof, and this Agreement may be amended or
supplemented by written instructions duly executed by the parties hereto at any
time, whether before or after the

39
<PAGE>

meetings of SWVA shareholders referred to in Section 7.1(a) hereof, except
statutory requirements and requisite approvals of shareholders and regulatory
authorities.

9.3 Descriptive Headings. Descriptive headings are for convenience only
and shall not control or affect the meaning and construction of any provisions
of this Agreement.

9.4 Governing Law. Except as required otherwise or otherwise indicated
herein, this Agreement shall be construed and enforced according to the laws of
the Commonwealth of Virginia.

9.5 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
telecopied or sent by recognized overnight courier service or registered or
certified mail, postage prepaid, addressed as follows:

If to FNB:

J. Daniel Hardy, Jr. , President
FNB Corporation
105 Arbor Drive
P. O. Box 600
Christiansburg, Virginia 24068
(Tel. 540-382-6041)
(Fax: 540-381-6768)

Copies to:

Peter A. Seitz, Esquire
First National Bank
P. O. Box 600
Christiansburg, Virginia 24073
(Tel. 540-382-4951)
(Fax: 540-381-6768)

Fred W. Palmore, III, Esquire
Mays & Valentine, L.L.P.
1111 East Main Street, 23rd Floor (23219)
P. O. Box 1122
Richmond, Virginia 23218-1122
(Tel. 804-697-1396)
(Fax: 804-697-1339)

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<PAGE>

If to SWVA:

D. W. Shilling, President
SWVA Bancshares, Inc.
302 Second Street, S.W.
Roanoke, Virginia 24011-1597
(Tel: 540-983-1405)
(Fax: 540-344-9028)

Copy to:

Richard Fisch, Esq.
Malizia, Spidi & Fisch, PC
1301 K Street, N.W., Suite 700 East
Washington, D.C. 20005
(Tel. 202-434-4660)
(Fax: 202-434-4661)

9.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts together
shall constitute one and the same agreement.

9.7 Severability. In the event any provisions of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provisions
hereof. Any provision of this Agreement held invalid or unenforceable only in
part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. Further, the parties agree that a court of competent
jurisdiction may reform any provision of this Agreement held invalid or
unenforceable so as to reflect the intended agreement of the parties hereto.

9.8 Subsidiaries. All representations, warranties, and covenants herein,
where pertinent, include and shall apply to the Subsidiaries of the party making
such representations, warranties, and covenants.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seals to be affixed hereto, all as of the dates first written above.

FNB Corporation

By: /s/ J. Daniel Hardy, Jr.
-----------------------------------------
J. Daniel Hardy, Jr.
President and Chief Executive Officer

ATTEST:

/s/ Peter A. Seitz
----------------------------
Secretary

SWVA Bancshares, Inc.

By: /s/ D. W. Shilling
-----------------------------------------

President and Chief Executive Officer

ATTEST:

/s/ Barbara C. Weddle
----------------------------
Secretary

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<PAGE>

CERTIFICATE OF THE DIRECTORS OF
SWVA BANCSHARES, INC.
SOUTHWEST VIRGINIA SAVINGS BANK, FSB

Reference is made to the Agreement and Plan of Merger, dated as of July __,
2000 (the "Agreement"), among SWVA Bancshares, Inc. ("SWVA") and FNB
Corporation. Capitalized terms used herein have the meanings given to them in
the Agreement.

Each of the following persons, being all of the directors of SWVA and
Southwest Virginia Savings Bank, FSB, express their intention to vote or cause
to be voted all shares of SWVA common stock which are held by such person, or
over which such person exercises full voting control (other than shares with
respect to which such person exercises control in a fiduciary capacity, as to
which no agreement is made hereby), in favor of the Merger.

_______________________________ ______________________________

_______________________________

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<PAGE>

ADDENDUM TO EMPLOYMENT AGREEMENT

WHEREAS, Southwest Virginia Savings Bank, FSB (the "Bank") and DW Shilling
(the "Employee") have previously entered into an Employment Agreement, as
amended (the "Agreement") dated May 19, 1999, and

WHEREAS, Section 12 of this Agreement provides that amendments to this
Agreement may be made in writing and signed by the parties, and

WHEREAS, SWVA Bancshares, Inc. ("Company") and FNB Corporation ("FNB") have
entered into an Agreement of Merger whereby the Company shall merge into FNB,
with FNB as the survivor and new parent corporation of the Bank ("Merger"), and

WHEREAS, FNB and the Bank seek to retain the employment of the Employee as
the President and CEO of the Bank after the Merger,

NOW THEREFORE, BE IT RESOLVED that this Addendum to the Agreement is hereby
authorized and agreed to by FNB and the Bank, and that this Addendum to the
Agreement shall be executed by FNB and the Bank prior to the Merger and be
presented to the Employee for acceptance and execution immediately upon and
coincident with the effective time of the Merger as follows:

1. As of the effective time of the Merger, the term of the Agreement shall
be amended at Section 2 of the Agreement to be for a period commencing on
the date of the Merger and ending thirty-six (36) months thereafter.

2. As of the effective time of the Merger, the Base Salary of the Employee
as specified at Section 3(a) of the Agreement shall be $112,800 per annum.

3. After the Merger, the Bank shall continue to maintain and operate the
automobile presently owned by the Bank and utilized by the Employee for
business use.

4. That the Employee shall be entitled to participate in any supplemental
executive retirement plan and any stock option plan maintained or
implemented for senior management of FNB or its subsidiaries.

5. That Employee hereby waives any rights or claims to voluntarily
terminate employment pursuant to Section 9(b) of the Agreement as it
relates to any changes in employee benefit plans of the Bank detailed at
Section 9(b)(ii) of the Agreement resulting from the Merger. Such waiver
shall not include a waiver of the right to terminate employment in the
event that the Bank shall fail to maintain the Employee's Base Salary as
detailed at Section 2. of this Addendum.

6. FNB shall reimburse the Employee for the reasonable fees and expenses
associated with maintaining a membership in a local country club in order
to facilitate the conduct of Bank business in an effective manner.
<PAGE>

This Addendum to the Agreement is hereby executed and agreed to by the parties
as evidenced below:

Southwest Virginia Savings Bank, FSB
------------------------------------

By:_______________________________

Its:______________________________

Date:_____________________________

As Secretary to the Bank, I hereby certify that the foregoing Addendum was
adopted and approved by a majority vote of a meeting of the Board of Directors
of the Bank, held on __________________, 2000, a quorum being present, with DW
Shilling absent from the discussion or the voting.

____________________________________SEAL
Secretary

FNB Corporation
---------------

By:_______________________________

Its:______________________________

Date:_____________________________

__________________________________
DW Shilling, Employee

Date:_____________________________

2
<PAGE>

ADDENDUM TO EMPLOYMENT AGREEMENT

WHEREAS, Southwest Virginia Savings Bank, FSB (the "Bank") and Barbara
Weddle (the "Employee") have previously entered into an Employment Agreement, as
amended (the "Agreement") dated May ___, 2000, and

WHEREAS, Section 12 of this Agreement provides that amendments to this
Agreement may be made in writing and signed by the parties, and

WHEREAS, FNB and the Bank seek to retain the employment of the Employee as
the Senior Vice President of the Bank after the Merger,

1. As of the effective time of the Merger, the term of the Agreement shall
be amended at Section 2 of the Agreement to be for a period commencing on
the date of the Merger and ending twelve (12) months thereafter.

2. As of the effective time of the Merger, the Base Salary of the Employee
as specified at Section 3(a) of the Agreement shall be $___________ per
annum.

3. That Employee hereby waives any rights or claims to voluntarily
terminate employment pursuant to Section 9(b) of the Agreement as it
relates to any changes in employee benefit plans of the Bank detailed at
Section 9(b)(ii) of the Agreement resulting from the Merger. Such waiver
shall not include a waiver of the right to terminate employment in the
event that the Bank shall fail to maintain the Employee's Base Salary as
detailed at Section 2. of this Addendum.
<PAGE>

This Addendum to the Agreement is hereby executed and agreed to by the parties
as evidenced below:

Southwest Virginia Savings Bank, FSB
------------------------------------

By:_______________________________

Its:______________________________

Date:_____________________________

As Secretary to the Bank, I hereby certify that the foregoing Addendum was
adopted and approved by a majority vote of a meeting of the Board of Directors
of the Bank, held on __________________, 2000, a quorum being present, with
Barbara Weddle absent from the discussion or the voting.

_______________________________________SEAL
Secretary

FNB Corporation
---------------

By:_______________________________

Its:______________________________

Date:_____________________________

__________________________________
Barbara Weddle, Employee

Date:_____________________________

2
<PAGE>

EXHIBIT A
TO THE
AGREEMENT AND PLAN
OF MERGER

PLAN OF MERGER
BETWEEN
SWVA BANCSHARES, INC.
AND
FNB CORPORATION

Pursuant to this Plan of Merger ("Plan of Merger"), SWVA Bancshares, Inc.
("SWVA"), a Virginia corporation, shall merge with and into FNB Corporation
("FNB"), a Virginia corporation in a merger under Section 13.1-716 of the
Virginia Stock Corporation Act.

ARTICLE 1
Terms of the Merger

1.1 The Merger. Subject to the terms and conditions of the Agreement
and Plan of Merger, dated as of August ___, 2000 between FNB and SWVA (the
"Merger Agreement"), at the Effective Date, SWVA shall merge with and into FNB ,
which shall be the surviving corporation. Each outstanding share of common
stock of SWVA shall be converted into and exchanged for shares of the common
stock of FNB and/or cash in accordance with Article 2 of this Plan of Merger
pursuant to a merger under Section 13.1-716 of the Virginia Stock Corporation
Act (the "Merger"). At the Effective Date, the Merger shall have the effect as
provided in Section 13.1-721 of the Virginia Stock Corporation Act.

1.2 Articles of Incorporation and Bylaws. The Articles of
Incorporation of FNB shall be the Articles of Incorporation of the surviving
corporation following the Effective Date until amended or repealed. The Bylaws
of FNB shall be the Bylaws of the surviving corporation following the Effective
Date until amended or repealed in accordance with the terms of such Bylaws.

1.3 Management of Surviving Corporation. On the Effective Date,
the number of Directors of FNB shall be increased by two members by adding one
member in Class I whose terms expire at the 2003 annual meeting of shareholders
and by adding one member in Class III whose terms expire at the 2002 annual
meeting of shareholders. B. L. Rakes shall be appointed to fill the vacancy
created in Class I and Courtney Hoge shall be appointed to fill the vacancy
created in Class III. At the next annual meeting of shareholders of FNB,
management of FNB will recommend to shareholders that those gentlemen be elected
as a member of Class I and Class III, respectively. In addition, on the
Effective Date, FNB agrees to assume the employment agreements between SWVA and
D. W. Shilling and Barbara Weddle, and as of the Effective Time, FNB shall enter
into an Addendum to the employment agreement for D. W. Shilling and Barbara
Weddle, as attached as Exhibit 1.4 to the Merger Agreement. In addition, as of
the Effective Date, FNB shall enter into an agreement with B. L. Rakes in which
FNB agrees to pay Mr. Rakes $17,000 in consideration for his agreement not to
compete with FNB and its affiliates for a period of one year.
<PAGE>

ARTICLE 2
Manner of Converting Shares

2.1 Conversion of SWVA Stock and Stock Options. At the Effective Date, by
virtue of the Merger, each share of the common stock, par value $0.10 per share,
of SWVA ("SWVA Common Stock") issued and outstanding immediately prior to the
Effective Date will be converted into either cash (the "Cash Consideration") or
shares of common stock, par value $5.00 per share, of FNB ("FNB Common Stock"),
the "Stock Consideration," which Stock Consideration together with the Cash
Consideration (the "Merger Consideration"), in each case as the holder thereof
shall have elected or be deemed to have elected in accordance with Section 2.3.

In the case that the Market Value of FNB Common Stock (as defined later in
this Section 2.1) is equal to or greater than $15.30 per share and equal to or
less than $18.70 per share, the Cash Consideration will be $20.25 per share and
the Stock Consideration will equal shares of FNB Common Stock with a Market
Value of $20.25. In the case that the Market Value of FNB Common Stock is
greater than $18.70 and less than or equal to $20.00, the Stock Consideration
will equal 1.083 shares of FNB Common Stock for each outstanding share of SWVA
Common Stock, and the Cash Consideration will be $20.25. In the case that the
Market Value of FNB Common Stock is less than $15.30 and equal to or greater
than $14.00, the Stock Consideration will equal 1.324 shares of FNB Common Stock
for each outstanding share of SWVA Common Stock, and the Cash Consideration will
be $20.25.

The Market Value of FNB Common Stock will be the average of the last
reported sales prices per share of FNB Common Stock as reported on the NASDAQ
Exchange Composite Transactions Tape (as reported in The Wall Street Journal,
-----------------------
or, if not reported thereby, another authoritative source as chosen by FNB) for
the thirty consecutive full trading days on such exchange (even if FNB Common
Stock does not trade in each such day) ending at the close of trading on the
tenth calendar day before the Effective Date (the "Market Value" and the
Measurement Period"). The ratio of shares of FNB's common stock that will be
exchanged for each outstanding share of SWVA Common Stock shall be referred to
herein as the "Exchange Ratio" and shall be rounded to the nearest thousandth
decimal point.

2.2 Allocation. Notwithstanding anything in this Plan of Merger to the
contrary, the aggregate amount of cash to be issued to shareholders of SWVA in
the Merger shall be equal to $1,785,742 (the "Cash Amount"); provided that the
Cash Amount may be changed by FNB to accommodate the exercise by FNB of its
option to change the Cash Number and the Stock Number pursuant to the last
sentence of this Section 2.2. As used in the Merger Agreement, the Cash Number
shall mean the aggregate number of shares of SWVA Common Stock to be converted
into the right to receive the Cash Consideration in the Merger, which shall be
equal to the Cash Amount divided by $20.25. The number of shares of SWVA Common
Stock to be converted into the right to receive Stock Consideration (the "Stock
Number") will be equal to (i) the number of shares of SWVA Common Stock issued
and outstanding immediately prior to the Effective Date of the Merger less (ii)
the sum of (A) the Cash Number and (B) the aggregate number of shares of SWVA
Common Stock to be exchanged for cash pursuant to Section 3.3. FNB shall have
the option to change the Cash Number and the Stock Number to more closely follow
the actual elections of SWVA shareholders pursuant to this Article 2, so long as
such

2
<PAGE>

modification to the Cash Number and the Stock Number does not prevent the
condition set forth in Section 7.1(d) of the Merger Agreement from being
satisfied.

2.3 Election. Subject to allocation in accordance with the provisions of
this Article, each record holder of shares of SWVA Common Stock issued and
outstanding immediately prior to the Election Deadline (as defined in Section
3.1(i)) will be entitled, in accordance with Section 3.1, (i) to elect to
receive in respect of each such share held in such manner (A) Cash Consideration
(a "Cash Election") or (B) Stock Consideration (a "Stock Election") thus, making
an election for all Cash Consideration, all Stock Consideration, or a mixture
thereof or (ii) to indicate that such record holder has no preference as to the
receipt of Cash Consideration or Stock Consideration for all such shares held by
such holder (a "Non-Election"). Shares of SWVA Common Stock in respect of which
a Non-Election is made or as to which no election is made (collectively, "Non-
Election Shares") shall be deemed by FNB to be shares in respect of which Cash
Elections or Stock Elections have been made, as FNB shall determine. Holders of
record of shares of SWVA Common Stock who hold such shares as nominees, trustees
or in other representative capacities (a "Representative") may submit multiple
Forms of Election (as hereinafter defined), provided that each such Form of
Election covers all the shares of SWVA Common Stock held by that Representative
for a particular beneficial owner.

2.4 Allocation of Cash Election Shares. In the event that the aggregate
number of shares in respect of which Cash Elections have been made (the "Cash
Election Shares") exceeds the Cash Number, all shares of SWVA Common Stock in
respect of which Stock Elections have been made (the "Stock Election Shares")
and all Non-Election Shares will be converted into the right to receive Stock
Consideration (and cash in lieu of fractional interests in accordance with
Section 3.3), and Cash Election Shares will be converted into the right to
receive Cash Consideration or Stock Consideration in the following manner:

(i) the number of Cash Election Shares covered by each Form of
Election (as defined in Section 3.1(i)) to be converted into Cash
Consideration will be determined by multiplying the number of Cash
Election Shares covered by such Form of Election by a fraction, (A)
the numerator of which is the Cash Number and (B) the denominator of
which is the aggregate number of Cash Election Shares rounded down to
the nearest whole number; and

(ii) all Cash Election Shares not converted into Cash
Consideration in accordance with Section 2.4(i) will be converted into
the right to receive Stock Consideration (and cash in lieu of
fractional interests in accordance with Section 3.3).

3
<PAGE>

Consideration, and all Stock Election Shares will be converted into the right to
receive Cash Consideration or Stock Consideration in the following manner:

(i) the number of Stock Election Shares covered by each Form of
Election to be converted into Cash Consideration will be determined
by multiplying the number of Stock Election Shares covered by such
Form of Election by a fraction, (A) the numerator of which is the
Cash Number less the number of Cash Shares and (B) the denominator of
which is the aggregate number of Stock Election Shares, rounded down
to the nearest whole number; and

(ii) all Stock Election Shares not converted into Cash Consideration
in accordance with Section 2.5(i) will be converted into the right to
receive Stock Consideration (and cash in lieu of fractional interests
in accordance with Section 3.3).

2.6 No Allocation. In the event that neither Section 2.4 nor Section 2.5
is applicable, all Cash Election Shares will be converted into the right to
receive Cash Consideration, all Stock Election Shares will be converted into the
right to receive Stock Consideration (and cash in lieu of fractional interests
in accordance with Section 3.3) and Non-Election Shares will be converted into
the right to receive Cash Consideration or Stock Consideration (and cash in lieu
of fractional interests in accordance with Section 3.3) as the Exchange Agent
shall determine.

2.7 Computations. The Exchange Agent (as defined in Section 3.1(i)) will
make all computations to give effect to this Article 2.

2.8 Cancellation of Shares. As of the Effective Date of the Merger, all
such shares of SWVA Common Stock will no longer be outstanding and automatically
be cancelled and retired and will cease to exist and each holder of a
certificate formerly representing any such shares of SWVA Common Stock (a "SWVA
Certificate") will cease to have any rights with respect thereto, except the
right to receive Merger Consideration and any additional cash in lieu of
fractional shares of FNB Common Stock to be issued or paid in consideration
therefor upon surrender of such SWVA Certificate in accordance with Article 3,
without interest, subject to rights of dissenting shareholders as provided under
Section 3.5.

ARTICLE 3
Manner of Exchange

3.1 Exchange Procedures.

(i) Not more than 45 days nor fewer than 30 days prior to the
Effective Date, First National Bank, Christiansburg, Virginia, as the
exchange agent ("Exchange Agent"), will mail a form of election (the
"Form of Election") to each shareholder of record of SWVA as of a
record date as close as practicable to the date of mailing and
mutually agreed to by SWVA and FNB. The Exchange Agent shall enter
into a written agreement with FNB and SWVA detailing its duties and
responsibilities and shall furnish evidence of liability insurance for
such activities in a form substantially similar to Exhibit C to the
Merger Agreement. In addition,

4
<PAGE>

the Exchange Agent will use its best efforts to make the Form of
Election available to the persons who become shareholders of SWVA
during the period between such record date and the Effective Date. Any
election to receive Merger Consideration will have been properly made
only if the Exchange Agent shall have received on the fifth business
day immediately preceding the Effective Date (the "Election
Deadline"), a Form of Election properly completed and accompanied by a
SWVA Certificate ("Certificate(s)") for the shares to which such Form
of Election relates, acceptable for transfer on the books of SWVA (or
an appropriate guarantee of delivery), as set forth in such Form of
Election. An election may be revoked only by written notice received
by the Exchange Agent prior to 5:00 p.m. on the Election Deadline. If
an election is so revoked, the Certificate(s) (or guarantee of
delivery, as appropriate) to which such election relates will be
promptly returned to the person submitting the same to the Exchange
Agent.

(ii) As soon as reasonably practicable after the Effective Date,
the Exchange Agent will mail to each holder of record of a
Certificate, whose shares of SWVA Common Stock were converted into the
right to receive Merger Consideration and those who failed to return a
properly completed Form of Election, (i) a letter of transmittal
(which will specify that delivery will be effected, and risk of loss
and title to the Certificates will pass, only upon delivery of the
Certificates to the Exchange Agent and will be in such form and have
such other provisions as the Exchange Agent may specify consistent
with the Merger Agreement) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger
Consideration.

(iii) With respect to properly made elections in accordance with
Section 3.1(i), and upon surrender in accordance with Section 3.1(ii)
of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate will be entitled to receive in exchange therefor the
Merger Consideration that such holder has the right to receive
pursuant to the provisions of Article 2, and the Certificate so
surrendered will forthwith be canceled. In the event of a transfer of
ownership of Shares that are not registered in the transfer records of
SWVA, as the case may be, payment may be issued to a person other than
the person in whose name the Certificate so surrendered is registered
if such Certificate is properly endorsed or otherwise in proper form
for transfer and the person requesting such issuance pays any transfer
or other taxes required by reason of such payment to a person other
than the registered holder of such Certificate or establishes to the
satisfaction of FNB that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.1, each
Certificate will be deemed at any time after the Effective Date to
represent only the right to receive upon such surrender the Merger
Consideration that the holder thereof has the right to receive in
respect of such Certificate pursuant to the provisions of Article 2.
No interest will be paid or will accrue on any cash payable to holders
of Certificates pursuant to the provisions of Article 2.

5
<PAGE>

3.4 Certain Adjustments. If, after the date hereof and on or prior
to the Closing Date, the outstanding shares of SWVA Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities is declared thereon with a record date
within such period, or any similar event shall occur, the Merger Consideration
will be adjusted accordingly to provide to the holders of SWVA Common Stock,
respectively, the same economic effect as contemplated by the Merger Agreement
prior to such reclassification, recapitalization, split-up, combination,
exchange or dividend or similar event.

ARTICLE 4
Treatment of Stock Options

4.1 Conversion of Stock Options. (a) On the Effective Date, all
rights with respect to SWVA Common Stock pursuant to stock options ("SWVA
Options") granted by SWVA under a SWVA stock option plan which are outstanding
on the Effective Date, whether or not they are exercisable, shall be converted
into and become rights with respect to FNB Common Stock, and FNB shall assume
each SWVA Option in accordance with the terms of the stock option plan under
which it was issued and the stock option agreement by which it is evidenced.
From the Effective Date forward, (i) each SWVA Option assumed by FNB may be
excised solely for shares of FNB Common Stock, (ii) the number of shares of FNB
Common Stock subject to each SWVA Option shall be equal to the number of shares
of SWVA Common Stock subject to such option immediately prior to the Effective
Date multiplied by the Exchange Ratio

6
<PAGE>

and (iii) the per share exercise price under each such SWVA Option shall be
adjusted by dividing the per share exercise price under each such option by the
Exchange Ratio and rounding down to the nearest cent; provided, however, that
the terms of each SWVA Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction after the Effective Date. It is
intended that the foregoing assumption shall be undertaken in a manner that will
not constitute a "modification" as defined in Section 425 of the Code, as to any
stock option which is an "incentive stock option." Shares of FNB Common Stock
issuable upon exercise of SWVA Options shall be covered by an effective
registration statement on Form S-8, and FNB shall use its reasonable best
efforts to file a registration statement on Form S-8 covering such shares as
soon as possible after the Effective Date, but in no event, no later than 30
days after the Effective Date.

ARTICLE 5
Termination

5.1 Termination. This Plan of Merger may be amended or terminated prior to
the Effective Time as provided in the Merger Agreement, subject to the
provisions of the Virginia Stock Corporation Act.

7
<PAGE>

EXHIBIT B

EXCHANGE AGENT AGREEMENT

This EXCHANGE AGENT AGREEMENT entered into this _____ day of __________,
2000, by and among FNB CORPORATION, a Virginia corporation ("FNB"), SWVA
BANCSHARES, INC., a Virginia corporation ("SWVA"), and FIRST NATIONAL BANK, a
national banking association with trust powers (the "Exchange Agent"), provides:

FNB and SWVA have entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which, SWVA will be merged with and into FNB on the
terms and conditions described therein. Capitalized terms used in this
Agreement and not otherwise defined shall have the meaning provided in the
Merger Agreement.

Section 3.1 of the Merger Agreement provides that FNB and SWVA will enter
into a written agreement with the Exchange Agent detailing the duties and
responsibilities of the Exchange Agent.

NOW, THEREFORE, in consideration of the premises, and the covenants and
agreements contained herein, the parties hereby agree as follows:

1. Service as Exchange Agent. The Exchange Agent agrees to serve as
-------------------------
exchange agent in connection with the Merger and agrees to perform the duties
and responsibilities provided for the Exchange Agent in the Merger Agreement.
Specifically, the Exchange Agent agrees to make all computations to give effect
to Article 2 of the Merger Agreement and to perform the exchange functions
provided in Article 3 of the Merger Agreement.

2. Representations. The Exchange Agent represents to SWVA and FNB that it
---------------
has liability insurance for the activities in which it will engage pursuant to
the terms hereof and that it has supplied evidence of such insurance to SWVA and
FNB.

3. Indemnity. Each of FNB and SWVA agree to indemnify and hold the
---------
Exchange Agent harmless with respect to all claims, demands and causes of action
related to the performance of its duties as Exchange Agent under the Merger
Agreement except for matters
<PAGE>

arising from its own gross negligence or willful misconduct in connection with
the performance of such duties.

4. Entire Agreement. This Agreement contains the entire agreement among
----------------
the parties hereto with respect to the subject matter hereof and supercedes all
prior arrangements and understandings with respect thereto.

5. Governing Law. This Agreement shall be construed and enforced
-------------
according to the laws of the Commonwealth of Virginia.

6. Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficiently delivered, personally
or telecopied, or sent by recognized overnight courier service, or registered or
certified mail, postage prepaid, addressed as follows:

_________________________________
_________________________________
_________________________________
_________________________________

7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original but such counterparts together
shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the date
first above written.

FNB CORPORATION

By________________________________
Its_______________________________

SWVA BANCSHARES

By________________________________
Its_______________________________

2
<PAGE>

FIRST NATIONAL BANK

By________________________________
Its_______________________________

3
<PAGE>

EXHIBIT C

AFFILIATE AGREEMENT

THIS AFFILIATE AGREEMENT (the "Agreement") dated as of _______________,
2000, between FNB CORPORATION, a Virginia corporation ("FNB") and each of the
individuals listed on Schedule A attached hereto (collectively, the
"Stockholders").

WHEREAS, FNB and SWVA BANCSHARES, INC. ("SWVA") have entered into an
Agreement and Plan of Merger, dated as of ______________, 2000, and a related
Plan of Merger (collectively, the "Affiliate Agreement") pursuant to which,
among other things, Southwest Virginia Savings Bank, FSB will become a wholly-
owned banking subsidiary of FNB (the "Affiliation");

WHEREAS, each of the Stockholders is the beneficial and registered owner
of, and has or shares the right to vote and dispose of, the number of shares of
common stock, par value $0.10 per share, of SWVA ("SWVA Common Stock") set forth
opposite such Stockholder's name on Schedule A hereto (the "Shares") and has
rights by option or otherwise to acquire additional shares of SWVA Common Stock
also set forth opposite such Stockholder's name on Schedule A hereto;

WHEREAS, the Shares amount to an aggregate of ________________ shares of
SWVA Common Stock, which constitute as of this date approximately __________% of
the issued and outstanding shares of SWVA Common Stock; and

WHEREAS, as a condition and inducement to entering into the Affiliation
Agreement, FNB has requested that the Stockholders agree, and the Stockholders
have agreed, to support the Affiliation.

NOW, THEREFORE, to induce FNB to enter into the Affiliation Agreement and
in consideration of mutual covenants, representations, warranties, and
agreements set forth herein and in the Affiliation Agreement, and intending to
be legally bound hereby, the parties hereto agree as follows:

1. Agreement to Vote. At such time as SWVA conducts a meeting of its
-----------------
stockholders, including any adjournments thereof, to approve the Affiliation
Agreement, each Stockholder agrees to vote or cause to be voted all of such
Stockholder's Shares in favor of the Affiliation Agreement, unless FNB is in
material default with respect to any covenant, representation, warranty or
agreement with respect to it contained in the Affiliation Agreement or the
Affiliation Agreement provides otherwise.

2. Agreement to Cooperative. In addition to the specific matters
------------------------
provided for elsewhere herein, each Stockholder shall take all action reasonably
requested by FNB and SWVA to facilitate the consummation of the Affiliation and
the transactions contemplated by the Affiliation Agreement.
<PAGE>

3. Securities Act of 1933. Each Stockholder agrees not to sell, transfer
----------------------
or otherwise dispose of the shares of common stock, par value $5.00 per share,
of FNB ("FNB Common Stock") such Stockholder will receive in connection with the
Affiliation, unless such sale, transfer or disposition is in compliance with
Rule 145 promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

4. Covenants of Stockholders. Each of the Stockholders, severally and not
jointly, covenants as follows:

(a) Restrictions on Transfer. During the term of this Agreement and
------------------------
except as agreed to by FNB, such Stockholder shall not pledge, hypothecate,
grant a security interest in, sell, transfer or otherwise dispose of or encumber
any of the Shares owned by him or her and will not enter into any agreement,
arrangement or understanding (other than a proxy for the purpose of voting his
or her shares in accordance with Section 1 hereof) which would during that term
(i) restrict, (ii) establish a right of first refusal to, or (iii) otherwise
relate to the transfer or voting of the Shares owned by such Stockholder.

(b) Other Acquisition Proposals. Such Stockholder agrees that until
---------------------------
the earlier of (i) the consummation of the Affiliation or (ii) the termination
of the Affiliation Agreement in accordance with its terms, the Stockholder will
not, directly or indirectly:

(x) vote any Shares, or cause or permit any of the Shares to be
voted, in favor of any other merger, consolidation, plan of liquidation,
sale of assets, reclassification or other transaction involving SWVA that
would have the effect of any person, other than FNB, acquiring control over
SWVA or any substantial portion of the assets of SWVA, except as otherwise
provided in the Affiliation Agreement. As used herein, the term "control"
means (1) the ability to direct the voting of 10% or more of the
outstanding voting securities of a person having ordinary voting power in
the election of directors or (2) the ability to direct the management and
policies of a person whether through ownership of securities, through any
contract, arrangement or understanding or otherwise.

(y) sell or otherwise transfer any of the Shares or cause or permit
any of the Shares to be sold or otherwise transferred (i) pursuant to any
tender offer, exchange offer or similar proposal made by any person other
than FNB or an affiliate of FNB, (ii) to any person known by such
Stockholder to be seeking to obtain control of SWVA or any substantial
portion of the assets of SWVA or to any other person (other than FNB or an
affiliate of FNB) under circumstances where such sale or transfer may
reasonably be expected to assist a person seeking to obtain such control or
(iii) for the principal purpose of avoiding the obligations of such
Stockholder under this Agreement.

(c) Additional Shares. The provisions of Section 1 and Subparagraph
-----------------
(a) above shall apply to all Shares currently owned and hereafter acquired by
each of the Stockholders, except for shares held in a fiduciary capacity.

5. Capacity Only as a Stockholder. It is understood and agreed that this
------------------------------
Agreement relates solely to the capacity of such Stockholder as a stockholder or
other beneficial owner of

2
<PAGE>

the Shares and is not in any way intended to affect the exercise by such
Stockholder of his or her responsibilities as a director or officer of SWVA. It
is further understood and agreed that the term "Shares" shall not include any
securities beneficially owned by the Stockholder as a trustee or fiduciary, and
that this Agreement is not in any way intended to affect the exercise by the
Stockholder of his or her fiduciary responsibility in respect of any such
securities.

6. Termination. This Agreement shall terminate upon the termination
-----------
of the Affiliation Agreement. In the event of the termination of this
Agreement, this Agreement shall forthwith become null and void and there shall
be no liability or obligation on the part of each Stockholder, or SWVA, or FNB
or their respective officers or directors, except that nothing in this Section 6
shall relieve any party hereto from any liability for breach of this Agreement
prior to such termination.

7. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed by the applicable party hereto in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each
of the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which it is
entitled at law or in equity and that each party waives the posting of any bond
or security in connection with any proceeding related thereto.

8. Amendments. This Agreement may not be modified, amended, altered
----------
or supplemented except upon the execution and delivery of a written agreement
executed by all of the parties hereto.

9. Governing Law. This Agreement shall in all respects be governed
-------------
by and construed in accordance with the laws of the Commonwealth of Virginia
without regard to the conflict of law principles thereof.

10. Benefit of Agreement. This Agreement shall be binding upon and
--------------------
inure to the benefit of, and shall be enforceable by, the parties hereto and
their respective personal representatives, successors and assigns, except that
neither party may transfer or assign any of its respective rights or obligations
hereunder without the prior written consent of the other party or, if by FNB, in
accordance with the Affiliation Agreement.

11. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.

3
<PAGE>

IN WITNESS WHEREOF, FNB and the Stockholders have caused this Agreement to
be duly executed as of the day and year first above written.

FNB CORPORATION

By:_____________________________

STOCKHOLDERS
------------

____________________________________ ______________________________________

4
<PAGE>

RP FINANCIAL, LC.
---------------------------------------------
Financial Services Industry Consultants

APPENDIX B

_____________ __, 2000

Board of Directors
SWVA Bancshares, Inc.
302 Second Street, S.W.
Roanoke, Virginia 24011

Members of the Board:

You have requested RP Financial, LC. ("RP Financial") to provide you
with its opinion as to the fairness from a financial point of view to the
stockholders of SWVA Bancshares, Inc., Roanoke, Virginia ("SWVA"), the
holding company for Southwest Virginia Savings Bank, FSB ("Southwest
Virginia"), of the Agreement and Plan of Merger (the "Agreement"), by and
between FNB Corporation, Christiansburg, Virginia ("FNB"), a Virginia
banking corporation, and SWVA. Unless otherwise defined, all capitalized
terms incorporated herein have the meanings ascribed to them in the
Agreement, which is incorporated herein by reference.

Summary Description of Consideration
------------------------------------

At the Effective Time, SWVA shall be merged into FNB. Concurrently, each
share of the common stock, par value $0.10 per share, of SWVA ("SWVA Common
Stock"), issued and outstanding immediately prior to the Effective Date
(except for dissenters' shares) will be converted into either cash (the
"Cash Consideration") or shares of common stock, par value $5.00 per share,
of FNB ("FNB Common Stock"), the "Stock Consideration". In the case that
the Market Value of FNB Common Stock is equal to or greater than $15.30 per
share and equal to or less than $18.70 per share, the Cash Consideration
will be $20.25 per share and the Stock Consideration will equal shares of
FNB Common Stock with a Market Value of $20.25. In the case that the Market
Value of FNB Common Stock is greater than $18.70 and less than or equal to
$20.00, the Stock Consideration will equal 1.083 shares of FNB Common Stock
for each outstanding share of SWVA Common Stock, and the Cash Consideration
will be $20.25. In the case that the Market Value of FNB Common Stock is
less than $15.30 and equal to or greater than $14.00, the Stock
Consideration will equal 1.324 shares of FNB Common Stock for each
outstanding share of SWVA Common Stock, and the Cash Consideration will be
$20.25.

________________________________________________________________________________

Washington Headquarters
Rosslyn Center Telephone: (730) 528-1700
1700 North Moore Street, Suite 2210 Fax No.: (703) 528-1788
Arlington, VA 22209 E-Mail: [email protected]
<PAGE>

The Market Value of FNB Common Stock will be the average of the last reported
sales prices per share of FNB Common Stock as reported on the NASDAQ Exchange
Composite Transactions Tape (as reported in The Wall Street Journal, or, if not
reported thereby, another authoritative source as chosen by FNB) for the thirty
consecutive full trading days on such exchange (even if FNB Common Stock does
not trade in each such day) ending at the close of trading on the tenth calendar
day before the Effective Date. The ratio of shares of FNB's Common Stock that
will be exchanged for each outstanding share of SWVA Common Stock shall be
referred to herein as the "Exchange Ratio" and shall be rounded to the nearest
thousandth decimal point. As of the date hereof, SWVA had 423,612 shares of
common stock issued and outstanding, and 64,049 granted stock options
outstanding.

RP Financial Background and Experience
--------------------------------------

RP Financial, as part of its financial institution valuation and consulting
practice, is regularly engaged in the valuation of financial institution
securities in connection with mergers and acquisitions of commercial banks and
thrift institutions, initial and secondary offerings, mutual-to-stock
conversions of thrift institutions, and business valuations for other corporate
purposes for financial institutions. As specialists in the securities of
financial institutions, RP Financial has experience in, and knowledge of, the
Virginia and Southeast U.S. markets for thrift and bank securities and financial
institutions operating in Virginia.

Materials Reviewed
------------------

In rendering this fairness opinion, RP Financial reviewed the following
material: (1) the Agreement, dated August 7, 2000, including exhibits; (2)
financial and other information for SWVA, all with regard to balance and off-
balance sheet composition, profitability, interest rates, volumes, maturities,
trends, credit risk, interest rate risk, liquidity risk and operations: (a)
audited and unaudited financial statements for the fiscal years ended June 30,
1995 through 2000, (b) stockholder, regulatory and internal financial and other
reports through June 30, 2000, (c) the conversion prospectus, dated August 12,
1994, (d) the proxy statements for the last three years, and (e) SWVA's
management and Board comments regarding past and current business, operations,
financial condition, and future prospects; and (3) financial and other
information for FNB including: (a) unaudited and audited financial statements
for the fiscal years ended December 31, 1996 through 1999, (b) stockholder,
regulatory, internal financial and/or other reports through June 30, 2000, (c)
proxy statements for the last three years, (d) publicly-available information
pertaining to the pending acquisition of CNB Holdings, Inc., holding company for
Community National Bank, Pulaski, Virginia and (e) FNB's management comments
regarding past and current business, operations, financial condition, and future
prospects.

RP Financial reviewed financial, operational, market area and stock price
and trading characteristics for SWVA and FNB (on a historical and pro forma
basis) relative to publicly-traded savings institutions and commercial banking
institutions, respectively, with comparable resources, financial condition,
earnings, operations and markets. RP Financial also considered the economic and
demographic characteristics in the local market area, and the potential impact
of the regulatory, legislative and economic environments on operations for SWVA
and FNB and

2
<PAGE>

the public perception of the savings institution and commercial banking
industries. RP Financial also considered: (1) the financial terms, financial and
operating condition and market area of other recently completed acquisitions of
comparable savings institutions both regionally and nationally; (2) discounted
cash flow analyses for SWVA incorporating future prospects; (3) expressions of
interest by third parties seeking a business combination with SWVA; (4) the pro
forma impact on FNB of the acquisitions of CNB Holdings, Inc. and SWVA, which
are expected to be accounted for as purchases; and (5) the market for FNB's
common stock.

In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning
SWVA and FNB furnished by the respective institutions to RP Financial for
review, as well as publicly-available information regarding other financial
institutions and economic and demographic data. SWVA and FNB did not restrict
RP Financial as to the material it was permitted to review. RP Financial did
not perform or obtain any independent appraisals or evaluations of the assets
and liabilities and potential and/or contingent liabilities of SWVA or FNB.

RP Financial expresses no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the merger as set forth in the Agreement to
be consummated. In rendering its opinion, RP Financial assumed that, in the
course of obtaining the necessary regulatory and governmental approvals for the
proposed Merger, no restriction will be imposed on FNB that would have a
material adverse effect on the ability of the Merger to be consummated as set
forth in the Agreement.

Opinion
-------

It is understood that this letter is directed to the Board of Directors of
SWVA in its consideration of the Agreement, and does not constitute a
recommendation to any stockholder of SWVA as to any action that such stockholder
should take in connection with the Agreement, or otherwise.

It is understood that this opinion is based on market conditions and other
circumstances existing on the date hereof.

It is understood that this opinion may be included in its entirety in any
communication by SWVA or its Board of Directors to the stockholders of SWVA. It
is also understood that this opinion may be included in its entirety in any
regulatory filing by SWVA or FNB, and that RP Financial consents to the summary
of the opinion in the proxy materials of SWVA, and any amendments thereto.
Except as described above, this opinion may not be summarized, excerpted from or
otherwise publicly referred to without RP Financial's prior written consent.

Based upon and subject to the foregoing, and other such matters considered
relevant, it is RP Financial's opinion that, as of the date hereof, the Merger
Consideration to be received by SWVA's stockholders, as described in the
Agreement, is fair to such stockholders from a financial point of view.

Respectfully submitted,
RP FINANCIAL, LC.

3
<PAGE>

Appendix C

ARTICLE 15 - CODE OF VIRGINIA

C-1
<PAGE>

ARTICLE 15.

DISSENTERS' RIGHTS

ss.13.1-729. Definitions.--In this article:

"Corporation" means the issuer of the shares held by a dissenter before
the corporate action, except that (i) with respect to a merger, "corporation"
means the surviving domestic or foreign corporation or limited liability company
by merger of that issuer, and (ii) with respect to a share exchange,
"corporation" means the acquiring corporation by share exchange, rather than the
issuer, if the plan of share exchange places the responsibility for dissenters'
rights on the acquiring corporation.

"Dissenter" means a shareholder who is entitled to dissent from
corporate action under ss. 13.1-730 and who exercises that right when and in the
manner required by ss.13.1-732 through ss.13.1-739.

"Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.

"Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.

"Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.

"Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.
<PAGE>

CODE OF VIRGINIA
ss 13.1-730

"Shareholder" means the record shareholder or the beneficial
shareholder. (1985, C. 522; 1992,C. 575.)

Law Review.--For article, "Dissenting Stockholders' Rights in Virginia:
Exclusivity of the Cash-Out Remedy and Determination of 'Fair Value,'" see 12 U.
Rich. L. Rev. 505 (1978). For article, "The New Virginia Stock Corporation Act:
A Primer," see 20 U. Rich. L. Rev. 67 (1985). For article, "Virginia's
Affiliated Transactions' Statute: Indulging Form Over Substance in Second
Generation Takeover Legislation," see 21 U. Rich. L. Rev. 489 (1987).

Editor's note.--The cases below were decided under prior law.

"Fair value" defined.--The term "fair value" of the stock of a
stockholder who dissents from a sale means the intrinsic worth of teh
dissenter's stock, which is to be arrived at after an appraisal of all the
elements of value. Lucas v. Pembroke Water Co., 205 Va. 84, 135 S.E.2d 147
(1964).

Elements of "fair value."--Among the elements to be considered in
arriving at the "fair value" or "fair cash value" of a dissenter's stock are its
market value, net asset value, investment value, and earning capacity. Lucas v.
Pembroke Water Co., 205 Va. 84, 135 S.E.2d 147 (1964).

The book value, or net asset value, of the stock is only one of the
factors to be considered. Mere book value alone is not determinative. Lucas v.
Pembroke Water Co., 205 Va. 84, 135 S.E.2d 147 (1964).

Excessive salary payments to officers and directors of a corporation
are assets of the corporation to be considered along with other assets in fixing
the value of the stock. Lucas v. Pembroke Water Co., 205 Va. 84, 135 S.E.2d 147
(1964).

"Fair cash value" means actual value.--Actual value of the shares of a
stockholder dissenting to a consolidation or merger of a corporation is
practically synonymous with "fair cash value" as those words were used in
repealed ss 13-47. Adams v. United States Distrib. Corp., 184 Va. 134, 34 S.E.2d
244 (1945), cert. denied, 327 U.S. 788, 66 S. Ct. 807, 90 L. Ed. 1014 (1946).

The term "fair cash value" means the intrinsic worth of the dissenter's
stock, which is to be arrived at after an appraisal of all the elements of
value. Adams v. United States Distrib. Corp., 184 Va. 134, 34 S.E.2d 244 (1945),
cert. denied, 327 U.S. 788, 66 S. Ct. 807, 90 L. Ed. 1014 (1946).

And not contractual value.--Dissenters may not recover the "contractual
value" of their shares, the par value plus accrued cumulative dividends, as
distinguished from the "fair cash value" or the "actual value." Adams v. United
States Distrib. Corp., 184 Va. 134, 34 S.E.2d 244 (1945), cert. denied, 327 U.S.
788, 66 S. Ct. 807, 90 L. Ed. 1014 (1946).

Determination of fair value of dissenters' stock upon conflicting
evidence is for the trial court. Lucas v. Pembroke Water Co., 205 Va. 84, 135
S.E.2d 147 (1964).

Amount of allowance of interest is left to discretion of trial court.
Lucas v. Pembroke Water Co., 205 Va. 84, 135 S.E.2d 147 (1964).

ss.13.1-730. Right to Dissent.--A. A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of, any of
the following corporate actions:

1. Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by ss.13.1-718 or the
articles of incorporation and the shareholder is entitled to vote on the merger
or (ii) if the corporation is a subsidiary that is merged with its parent under
ss.13.1-719;

2. Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;

3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation if the shareholder was entitled to vote on the
sale or exchange or if the sale or exchange was in furtherance of a dissolution
on which the shareholder was entitled to vote, provided that such dissenter's
rights shall not apply in the case of (i) a sale or exchange pursuant to court
order, or (ii) a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;

4. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors
<PAGE>

ss.13.1-730 CORPORATIONS ss.13.1-730

provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.

B. A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.

C. Notwithstanding any other provision of this article, with respect to
a plan of merger or share exchange or a sale or exchange of property there shall
be no right of dissent in favor of holders of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting at which the plan of merger or
share exchange or the sale or exchange of property is to be acted on, were (i)
listed on a national securities exchange or on the National Association of
Securities Dealers Automated Securities System (NASDAQ) or (ii) held by at least
2,000 record shareholders, unless in either case:

1. The articles of incorporation of the corporation issuing such shares
provide otherwise;

2. In the case of a plan of merger or share exchange, the holders of
the class or series are required under the plan of merger or share exchange to
accept for such shares anything except:

a. Cash;

b. Shares or membership interests, or shares or membership
interests and cash in lieu of fractional shares (i) of the surviving or
acquiring corporation or limited liability company or (ii) of any other
corporation or limited liability company which, at the record date
fixed to determine the shareholders entitled to receive notice of and
to vote at the meeting at which the plan of merger or share exchange is
to be acted on, were either listed subject to notice of issuance on a
national securities exchange or held of record by at least 2,000 record
shareholders or members; or

c. A combination of cash and shares or membership interests as
set forth in subdivisions 2a and 2b of this subsection; or

3. The transaction to be voted on is an "affiliated transaction" and is
not approved by a majority of "disinterested directors" as such terms are
defined in ss.13.1-725.

D. The right of a dissenting shareholder to obtain payment of the fair
value of his shares shall terminate upon the occurrence of any one of the
following events:

1. The proposed corporate action is abandoned or rescinded;

2. A court having jurisdiction permanently enjoins or sets aside the
corporate action; or

3. His demand for payment is withdrawn with the written consent of the
corporation.

E. Notwithstanding any other provision of this article, no shareholder
of a corporation located in a county having a county manager form of government
and which is exempt from income taxation under ss.501 (c) or ss.528 of the
Internal Revenue Code and no part of whose income inures or may inure to the
benefit of any private shareholder or individual shall be entitled to dissent
and obtain payment for his shares under this article. (Code 1950, S.S. 13-85,
13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c. 425; 1975, c. 500; 1984,
c. 613; 1985, c. 522; 1986, c. 540; 1988, c. 442; 1990, c. 229; 1992, c. 575;
1996, c. 246; 1999, c. 288.)

The 1999 amendment added subsection E.

Law Review.--For article discussing shareholder approval of mergers,
see 56 Va. L. Rev. 755 (1970). For survey of Virginia law on business
associations for the year 1971-1972, see 58 Va. L. Rev. 1172 (1972). For survey
of Virginia administrative law for the year 1974-1975, see 61 Va. L. Rev. 1632
(1975). For survey of Virginia law on business associations for the year
1974-1975, see 61 Va. L. Rev. 1650 (1975).
<PAGE>

ss.13.1-731 CODE OF VIRGINIA ss.13.1-732

For article, "Virginia's Affiliated Transactions' Statute: Indulging Form Over
Substance in Second Generation Takeover Legislation," see 21 U. Rich. L. Rev.
489 (1987).

Editor's note.--The cases below were decided under prior law.

Purpose of statutes.--The design of the statutes relating to the rights
of a dissenting stockholder is to assure him that he will be fully compensated
for the value of that of which he has been deprived by the merger, and no more.
Adams v. United States Distrib. Corp., 184 Va. 134, 34 S.E.2d 244 (1945), cert.
denied, 327 U.S. 788, 66 S. Ct. 807, 90 L. Ed. 1014 (1946).

Stockholder has election as to dissent.--Every stockholder of a merging
corporation has an election either to dissent and secure in the prescribed
manner the fair cash value of his stock or, if he fails to dissent, to be bound
by the terms of the merger. Adams v. United States Distrib. Corp., 184 Va. 134,
34 S.E.2d 244 (1945), cert. denied, 327 U.S. 788, 66 S. Ct. 807, 90 L. Ed. 1014
(1946); Pittston Co. v. O'Hara, 191 Va. 886, 63 S.E.2d 34, appeal dismissed, 342
U.S. 803, 72 S. Ct. 38, 96 L. Ed. 608 (1951).

Exclusiveness of statutory remedy.--Unless a corporate merger be
tainted with fraud or illegality, the dissenting stockholder must pursue the
remedy prescribed by statute. Adams v. United States Distrib. Corp., 184 Va.
134, 34 S.E.2d 244 (1945), cert. denied, 327 U.S. 788, 66 S. Ct. 807, 90 L. Ed.
1014 (1946), wherein the court expressly refused to agree with Weiss v. Atkins,
52 F. Supp. 418 (S.D.N.Y. 1943), rev'd, 149 F.2d 193 (2nd Cir. 1945), and
pointed out that Winfree v. Riverside Cotton Mills, 113 Va. 717, 75 S.E. 309
(1912), holding contra, was no longer applicable. See McGhee v. General Fin.
Corp., 84 F. Supp. 24 (W.D. Va. 1949), holding that the remedy is available
only in state courts.

The provisions of former law in regard to the valuation of the interest
of dissatisfied members or stockholders in case of the merger of their
corporation with another, were held to apply only in those cases in which the
corporations seeking to merge had proceeded in all respects by authority of law.
The provisions, therefore, were not exclusive of the right of dissatisfied
members to contest the validity of an order of merger by the State Corporation
Commission claimed to be destructive of their rights and interests, and utterly
without warrant of law. Jones v. Rhea, 130 Va. 345, 107 S.E. 814 (1921).

It was held that the existence of a summary remedy of appraisal and
payment under former ss 13-85 did not make the remedy at law adequate in such a
manner as to defeat equity jurisdiction, and the existence of such remedy did
not otherwise foreclose the plenary jurisdiction of a court of equity to grant
an injunction in advance of action or to grant a money award on equitable
principles after action. Craddock-Terry Co. v. Powell, 181 Va. 417, 25 S.E.2d
363 (1943); Pittston Co. v. O'Hara, 191 Va. 886, 63 S.E.2d 34, appeal dismissed,
342 U.S. 803, 72 S. Ct. 38, 96 L. Ed. 608 (1951).

Purchaser of stock is legally put upon notice that in event of merger
his remedy will be provided by the statute. McGhee v. General Fin. Corp., 84 F.
Supp. 24 (W.D. Va. 1949).

ss.13.1-731. Dissent by Nominees and Beneficial Owners.--A. A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.

B. A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:

1. He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and

2. He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote. (Code 1950, S.S.
13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c. 425; 1975, c. 500;
1984, c. 613; 1985, c. 522.)

ss.13.1-732. Notice of Dissenters' Rights.--A. If proposed corporate
action creating dissenters' rights under ss. 13.1-730 is submitted to a vote at
a shareholders' meeting, the meeting notice shall state that shareholders are or
<PAGE>

ss.13.1-733 CORPORATIONS ss.13.1-735

may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article.

B. If corporate action creating dissenters' rights under ss.13.1-730 is
taken without a vote of shareholders, the corporation, during the ten-day period
after the effectuation of such corporate action, shall notify in writing all
record shareholders entitled to assert dissenters' rights that the action was
taken and send them the dissenters' notice described in ss.13.1-734.(1985, c.
522.)

ss.13.1-733. Notice of Intent to Demand Payment.--A. If proposed
corporate action creating dissenters' rights under ss.13.1-730 is submitted to a
vote at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights (i) shall deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effectuated and (ii) shall not vote such shares in favor of the proposed action.

B. A shareholder who does not satisfy the requirements of subsection A
of this section is not entitled to payment for his shares under this article.
(Code 1950, S.S. 13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c.
425; 1975, c. 500; 1984, c. 613; 1985, c. 522.)

ss.13.1-734. Dissenters' Notice.--A. If proposed corporate action
creating dissenters' rights under ss.13.1-730 is authorized at a shareholders'
meeting, the corporation, during the ten-day period after the effectuation of
such corporate action, shall deliver a dissenters' notice in writing to all
shareholders who satisfied the requirements of ss.13.1-733.

B. The dissenters' notice shall:

1. State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;

2. Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;

3. Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before or
after that date;

4. Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the date
of delivery of the dissenters' notice; and

5. Be accompanied by a copy of this article. (Code 1950, S.S. 13-85,
13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c. 425; 1975, c. 500; 1984,
c. 613; 1985, c. 522.)

ss.13.1-735. Duty to Demand Payment.--A. A shareholder sent a
dissenters' notice described in ss.13.1-734 shall demand payment, certify that
he acquired beneficial-ownership of the shares before or after the date required
to be set forth in the dissenters' notice pursuant to paragraph 3 of subsection
B of ss. 13.1-734, and, in the case of certificated shares, deposit his
certificates in accordance with the terms of the notice.

B. The shareholder who deposits his shares pursuant to subsection A of
this section retains all other rights of a shareholder except to the extent that
these rights are canceled or modified by the taking of the proposed corporate
action.

C. A shareholder who does not demand payment and deposits his share
certificates where required each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article. (Code 1950, S.S.
13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c. 425; 1975, c. 500;
1984, c. 613; 1985, c. 522.)
<PAGE>

ss.13.1-736 CODE OF VIRGINIA ss.13.1-739

ss.13.1-736. Share Restrictions.--A. The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received.

B. The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder except to the
extent that these rights are canceled or modified by the taking of the proposed
corporate action. (Code 1950, S.S. 13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968,
c. 733; 1972, c. 425; 1975, c. 500; 1984, c. 613; 1985, c. 522.)

ss.13.1-737. Payment.--A. Except as provided in ss.13.1-738, within
thirty days after receipt of a payment demand made pursuant to ss.13.1-735, the
corporation shall pay the dissenter the amount the corporation estimates to be
the fair value of his shares, plus accrued interest. The obligation of the
corporation under this paragraph may be enforced (i) by the circuit court in the
city or county where the corporation's principal office is located, or, if none
in this Commonwealth, where its registered office is located or (ii) at the
election of any dissenter residing or having its principal office in the
Commonwealth, by the circuit court in the city or county where the dissenter
resides or has its principal office. The court shall dispose of the complaint on
an expedited basis.

B. The payment shall be accompanied by:

1. The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the effective date of the corporate
action creating dissenters' rights, an income statement for that year, a
statement of changes in shareholders' equity for that year, and the latest
available interim financial statements, if any;

2. An explanation of how the corporation estimated the fair value of
the shares and of how the interest was calculated;

3. A statement of the dissenters' right to demand payment under
ss.13.1-739; and

4. A copy of this article. (Code 1950, S.S. 13-85, 13.1-75, 13.1-78;
1956, c. 428; 1968, c. 733; 1972, c. 425; 1975, c. 500; 1984, c. 613; 1985, c.
522.)

ss.13.1-738. After-Acquired Shares.--A. A corporation may elect to
withhold payment required by ss. 13.1-737 from a dissenter unless he was the
beneficial owner of the shares on the date of the first publication by news
media or the first announcement to shareholders generally, whichever is earlier,
of the terms of the proposed corporate action, as set forth in the dissenters'
notice.

B. To the extent the corporation elects to withhold payment under
subsection A of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
offer to pay this amount of each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares and of how the
interest was calculated, and a statement of the dissenter's right to demand
payment under ss.13.1-739. (1985, c. 522.)

ss.13.1-739. Procedure if Shareholder Dissatisfied with Payment or
Offer.--A. A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and the amount of interest due, and demand
payment of his estimate (less any payment under ss. 13.1-737), or reject the
corporation's offer under ss. 13.1-738 and demand payment of the fair value of
his shares and interest due, if the dissenter believes that the amount paid
under ss.13.1-737 or offered under ss. 13.1-738 is less than the fair value of
his shares or that the interest due is incorrectly calculated.
<PAGE>

ss.13.1-740 CORPORATIONS ss.13.1-741

B. A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection A
of this section within thirty days after the corporation made or offered payment
for his shares. (Code 1950, S.S. 13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c.
733; 1972, c. 425; 1975, c. 500; 1984, c. 613; 1985, c. 522.)

ss.13.1-740. Court Action.--A. If a demand for payment under
ss.13.1-739 remains unsettled, the corporation shall commence a proceeding
within sixty days after receiving the payment demand and petition the circuit
court in the city or county described in subsection B of this section to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.

B. The corporation shall commence the proceeding in the city or county
where its principal office is located, or, if none in this Commonwealth, where
its registered office is located. If the corporation is a foreign corporation
without a registered office in this Commonwealth, it shall commence the
proceeding in the city or county in this Commonwealth were the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.

C. The corporation shall make all dissenters, whether or not residents
of this Commonwealth, whose demands remain unsettled parties to the proceeding
as in an action against their shares and all parties shall be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.

D. The corporation may join as a party to the proceeding any
shareholder who claims to be a dissenter but who has not, in the opinion of the
corporation, complied with the provisions of this article. If the court
determines that such shareholder has not complied with the provisions of this
article, he shall be dismissed as a party.

E. The jurisdiction of the court in which the proceeding is commenced
under subsection B of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.

F. Each dissenter made a party to the proceeding is entitled to
judgment (i) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation or (ii)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under ss.13.1-738. (Code 1950,
S.S. 13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c. 425; 1975, c.
500; 1984, c. 613; 1985, c. 522.)

ss.13.1-741. Court Costs and Counsel Fees.--A. The court in an
appraisal proceeding commenced under ss.13.1-740 shall determine all costs of
the proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters did not act in good faith in demanding payment under ss.13.1-739.

B. The court may also assess the reasonable fees and expenses of
experts,
<PAGE>

ss.13.1-742 CODE OF VIRGINIA ss.13.1-742

excluding those of counsel, for the respective parties, in amounts the
court finds equitable:

1. Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of ss. 13.1-732 through ss. 13.1-739; or

2. Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed did not act in good faith with respect to the rights provided by this
article.

C. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, the court
may award to these counsel reasonable fees to be paid out of the amounts awarded
the dissenters who were benefited.

D. In a proceeding commenced under subsection A of ss. 13.1-737 the
court shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding. (Code
1950, S.S. 13-85, 13.1-75, 13.1-78; 1956, c. 428; 1968, c. 733; 1972, c. 425;
1975, c. 500; 1984, c. 613; 1985, c. 522.)
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers

Article 10 of Chapter 9 of Title 13.1 of the Code of Virginia permits a
Virginia corporation to indemnify any director or officer for reasonable
expenses incurred in any legal proceeding in advance of final disposition of the
proceeding, if the director or officer furnishes the corporation a written
statement of his good faith belief that he has met the standard of conduct
prescribed by the Code, and a determination is made by the board of directors
that such standard has been met. In a proceeding by or in the right of the
corporation, no indemnification shall be made in respect of any matter as to
which an officer or director is adjudged to be liable to the corporation, unless
the court in which the proceeding took place determines that, despite such
liability, such person is reasonably entitled to indemnification in view of all
the relevant circumstances. In any other proceeding, no indemnification shall be
made if the director or officer is adjudged liable to the corporation on the
basis that he improperly received personal benefit. Corporations are given the
power to make any other or further indemnity, including advancement of expenses,
to any director or officer that may be authorized by the articles of
incorporation or any bylaw made by the shareholders, or any resolution adopted,
before or after the event, by the shareholders, except an indemnity against
willful misconduct or a knowing violation of the criminal law. Unless limited by
its articles of incorporation, indemnification of a director or officer is
mandatory when he entirely prevails in the defense of any proceeding to which he
is a party because he is or was a director or officer.

The Articles of Incorporation of the Registrant contain provisions
indemnifying the directors and officers of the Registrant to the full extent
permitted by Virginia law. In addition, the Articles of Incorporation eliminate
the personal liability of the Registrant's directors and officers to the
Registrant or its shareholders for monetary damages in excess of one dollar to
the full extent permitted by Virginia law.

Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits:

The following exhibits are filed on behalf of the Registrant as part of
this Registration Statement:

Exhibit No. Document
----------- --------

2 Agreement and Plan of Reorganization dated as of
February 1, 1996, between the Registrant, First
National Bank, and FNB Bank, filed as Exhibit 2 to the
Registration Statement on Form S-4 filed by FNB
Corporation with the Securities and Exchange Commission
on May 3, 1996 (Registration number 333-2524) is
incorporated herein by reference.

2.1 Agreement and Plan of Merger between CNB Holdings, Inc.
and FNB Corporation, dated as of July 10, 2000, filed
as Appendix A to the Proxy Statement/Prospectus
included in the Registrant's Registration Statement on
Form S-4, dated September 13, 2000.

2.2 Agreement and Plan of Merger between SWVA Bancshares,
Inc. and FNB Corporation, dated as August 7, 2000,
filed as Appendix A to the Proxy Statement/Prospectus
included in this Registration Statement.

II-1
<PAGE>

3.1 Articles of Incorporation of FNB Corporation,
incorporated herein by reference to Exhibit 3.1 of the
Registrant's Form 10-K, dated as of December 31, 1996.

3.2 Bylaws of Virginia FNB Corporation, incorporated herein
by reference to Exhibit 3.2 of the Registrant's Form
10-K, dated as of December 31, 1997.

3.3 Articles of Amendment to the Articles of Incorporation,
incorporated herein by reference to Exhibit 3.3 of
Registrant's Registration Statement on Form S-4, dated
September 13, 2000.

5 Legal opinion of Mays & Valentine, L.L.P.

8 Form of tax opinion of Mays &Valentine, L.L.P.

10.A Consulting and Noncompetition Agreement With Put Option
dated January 15, 1999, between Samuel H. Tollison and
Registrant, filed with the Commission as Exhibit (10) D
on Form 10-K for the year ended December 31, 1998, is
incorporated herein by reference.

10.B First Amendment to Consulting and Noncompetition
Agreement dated December 23, 1999, between Samuel H.
Tollison and Registrant, filed with the Commission as
Exhibit (10) B on Form 10-K for the year ended December
31, 1999, is incorporated herein by reference.

10.C Employment Agreement dated September 11, 1997 between
Julian D. Hardy, Jr., First National Bank, and
Registrant, filed with the Commission as Exhibit (10)B
on Form 10-Q for the quarter ended September 30, 1997,
is incorporated herein by reference.

10.D Change in control agreements with seven senior officers
of First National Bank and one senior officer of
Registrant. All agreements have identical terms and, as
such, only a sample copy of the agreements was filed
with the Commission as Exhibit (10)C on Form 10-Q for
the quarter ended September 30, 1997, and is
incorporated herein by reference. The officers covered
by the agreements are as follows:

(1) Daniel A. Becker, Senior Vice President, Chief
Financial Officer, dated April 1, 1999
(2) Keith J. Houghton, Senior Vice President, Manager
Commercial Banking, dated April 1, 1999
(3) Darlene S. Lancaster, Senior Vice President,
Manager, Mortgage Loan Department, dated August
25, 1997
(4) R. Bruce Munro, Senior Vice President, Chief
Credit Administration Officer, dated August 25,
1997
(5) Woody B. Nester, Senior Vice President, Cashier,
dated August 25, 1997
(6) Peter A. Seitz, Executive Vice President, dated
August 25, 1997
(7) Perry D. Taylor, Senior Vice President,
Comptroller, dated August 25, 1997

II-2
<PAGE>

(8) Litz H. Van Dyke, Executive Vice President, dated
August 25, 1997

The agreements with Mr. Seitz and Mr. Van Dyke were
terminated under the terms of the Employment Agreement
referred to in Exhibit (10) E below.

10.E Employment agreement dated March 23, 1999 with two
executive officers of First National Bank. Both
agreements have identical terms and, as such, only a
sample copy of the agreement was filed with the
Commission as Exhibit (10) E on Form 10-Q for the
quarter ended March 31, 1999, and is incorporated
herein by reference. The officers covered by this
agreement are:

(1) Peter A. Seitz, Executive Vice President
(2) Litz H. Van Dyke, Executive Vice President

21 Subsidiaries of the Registrant.

23.1 Consent of Mays & Valentine, L.L.P. (included in
Exhibit 5).

23.2 Consent of McLeod & Company.

23.3 Consent of Cherry Bekaert & Holland L.L.P.

23.4 Consent of RP Financial.

24 Powers of attorney (included on signature page).

99.1 Form of Proxy of SWVA Bancshares, Inc.

(b) Financial Statement Schedules

Not applicable.

Item 22. Undertakings

(a) Undertakings Required by Item 512 of Regulation S-K.

The undersigned registrant hereby undertakes:

(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-3
<PAGE>

(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; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to 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;

(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.

The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party which is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.

The Registrant undertakes that every prospectus (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes 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.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

II-4
<PAGE>

(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned; thereunto duly authorized, in Christiansburg,
Virginia, on September 21, 2000.

FNB CORPORATION

By: /s/ J. Daniel Hardy, Jr.
____________________________________
J. Daniel Hardy, Jr.
President and Chief Executive Officer

POWER OF ATTORNEY

Each of the undersigned hereby appoints [J. Daniel Hardy, Jr. and Peter A.
Seitz] as attorneys and agents for the undersigned, with full power of
substitution, for and in the name, place and stead of the undersigned, to sign
and file with the Securities and Exchange Commission under the Securities Act of
1933, as amended, any and all amendments and exhibits to this Registration
Statement and any and all applications, instruments and other documents to be
filed with the Securities and Exchange Commission pertaining to the registration
of securities covered hereby with full power and authority to do and perform any
and all acts and things whatsoever requisite or desirable.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ J. Daniel Hardy, Jr. President and Chief Executive Officer 9/21/00
------------------------ -------
J. Daniel Hardy, Jr. (Principal Executive Officer)

/s/ Daniel A. Becker Chief Financial Officer 9/21/00
------------------------ -------
Daniel A. Becker (Principal Accounting Officer and
Principal Financial Officer

/s/ Kendall O. Clay Director 9/21/00
------------------------ -------
Kendall O. Clay

/s/ Daniel D. Hamrick Director 9/21/00
------------------------ -------
Daniel D. Hamrick

/s/ Joan H. Munford Director 9/21/00
------------------------ -------
Joan H. Munford

II-6
<PAGE>

/s/ Douglas Covington Director 9/21/00
------------------------ -------
Douglas Covington

/s/ James L. Hutton Director 9/21/00
------------------------ -------
James L. Hutton

/s/ Steven D. Irvin Director 9/21/00
------------------------ -------
Steven D. Irvin

/s/ Charles W. Steger Director 9/21/00
------------------------ -------
Charles W. Steger

/s/ John T. Wyatt Director 9/21/00
------------------------ -------
John T. Wyatt

II-7
<PAGE>

EXHIBIT INDEX

Exhibit No. Document
---------- --------

2 Agreement and Plan of Reorganization dated as of February 1,
1996, between the Registrant, First National Bank, and FNB Bank,
filed as Exhibit 2 to the Registration Statement on Form S-4
filed by FNB Corporation with the Securities and Exchange
Commission on May 3, 1996 (Registration number 333-2524) is
incorporated herein by reference.

2.1 Agreement and Plan of Merger between CNB Holdings, Inc. and FNB
Corporation, dated as of July 10, 2000, filed as Appendix A to
the Proxy Statement/Prospectus included in the Registrant's
Registration Statement on Form S-4, dated September 13, 2000.

2.2 Agreement and Plan of Merger between SWVA Bancshares, Inc. and
FNB Corporation, dated as August 7, 2000, filed as Appendix A to
the Proxy Statement/Prospectus included in this Registration
Statement.

3.1 Articles of Incorporation of FNB Corporation, as amended,
incorporated herein by reference to Exhibit 3.1 of the
Registrant's Form 10-K, dated as of December 31, 1996.

3.2 Bylaws of FNB Corporation, incorporated herein by reference to
Exhibit 3.2 of the Registrant's Form 10-K, dated as of December
31, 1997.

3.3 Articles of Amendment to the Articles of Incorporation,
incorporated herein by reference to Exhibit 3.3 of Registrant's
Registration Statement on Form S-4, dated September 13, 2000.

5 Legal opinion of Mays & Valentine, L.L.P.

8 Form of tax opinion of Mays & Valentine, L.L.P.

10.A Consulting and Noncompetition Agreement With Put Option dated
January 15, 1999, between Samuel H. Tollison and Registrant,
filed with the Commission as Exhibit (10) D on Form 10-K for the
year ended December 31, 1998, is incorporated herein by
reference.

10.B First Amendment to Consulting and Noncompetition Agreement dated
December 23, 1999, between Samuel H. Tollison and Registrant,
filed with the Commission as Exhibit (10) B on Form 10-K for the
year ended December 31, 1999, incorporated herein by reference.

10.C Employment Agreement dated September 11, 1997 between Julian D.
Hardy, Jr., First National Bank, and Registrant, filed with the
Commission as Exhibit (10)B on Form 10-Q for the quarter ended
September 30, 1997, is incorporated herein by reference.

10.D Change in control agreements with seven senior officers of First
National Bank and one senior officer of Registrant. All
agreements have identical terms and, as

II-8
<PAGE>

such, only a sample copy of the agreements was filed with the
Commission as Exhibit (10)C on Form 10-Q for the quarter ended
September 30, 1997, and is incorporated herein by reference. The
officers covered by the agreements are as follows:

(1) Daniel A. Becker, Senior Vice President, Chief Financial
Officer, dated April 1, 1999
(2) Keith J. Houghton, Senior Vice President, Manager Commercial
Banking, dated April 1, 1999
(3) Darlene S. Lancaster, Senior Vice President, Manager,
Mortgage Loan Department, dated August 25, 1997
(4) R. Bruce Munro, Senior Vice President, Chief Credit
Administration Officer, dated August 25, 1997
(5) Woody B. Nester, Senior Vice President, Cashier, dated
August 25, 1997
(6) Peter A. Seitz, Executive Vice President, dated August 25,
1997
(7) Perry D. Taylor, Senior Vice President, Comptroller, dated
August 25, 1997
(8) Litz H. Van Dyke, Executive Vice President, dated August 25,
1997

The agreements with Mr. Seitz and Mr. Van Dyke were terminated
under the terms of the Employment Agreement referred to in
Exhibit (10) E below.

10.E Employment agreement dated March 23, 1999 with two executive
officers of First National Bank. Both agreements have identical
terms and, as such, only a sample copy of the agreement was filed
with the Commission as Exhibit (10) E on Form 10-Q for the
quarter ended March 31, 1999, and is incorporated herein by
reference. The officers covered by this agreement are:
(1) Peter A. Seitz, Executive Vice President
(2) Litz H. Van Dyke, Executive Vice President

21 Subsidiaries of the Registrant.

23.1 Consent of Mays & Valentine, L.L.P. (included in Exhibit 5).

23.2 Consent of McLeod & Company.

23.3 Consent of Cherry Bekaert & Holland L.L.P.

23.4 Consent of RP Financial.

24 Powers of attorney (included on signature page).

99.1 Form of Proxy of SWVA Bancshares, Inc.

II-9