CommunityOne Bancorp fka COB

[Enterprising Investor]

FNBN Goals for 2013

Looking forward to 2013, we have four key objectives for our company: (1) successfully complete the merger of CommunityOne and Granite during the second quarter of 2013, (2) continue to reduce problem asset levels and increase asset quality, (3) return the company to profitability in the second half of 2013, and (4) continue efforts to restore FNB and its subsidiaries to a satisfactory condition.

On March 1, 2013, we filed an application with the OCC to merge Granite into CommunityOne. Subject to regulatory approval, we expect to complete the merger during the second quarter of 2013. Merger of the two banks will enable us to consolidate overlapping branches and ATM networks, complete the consolidation of operational functions, implement the CommunityOne product set at Granite, and complete the merger related expense generating activities, all of which we expect to deliver expense synergies in the third quarter of 2013. The bank merger also will allow us to better serve customers throughout our footprint.

We will continue to focus significant resources on the resolution of nonperforming assets during 2013 in order to further reduce the level of these assets.

The achievement of the first two goals, along with other strategies to increase net interest margin, increase noninterest income and reduce noninterest expense, we expect will enable us to return to profitability in the second half of 2013. We plan to continue to increase our net interest margin in 2013, primarily through the continued prudent deployment of excess cash positions into higher yielding loans and securities, continued reductions in nonperforming assets and additional reductions in the cost of interest-bearing deposits via down-pricing and relationship focus. During 2013, we expect to further grow our mortgage banking activities from the $168.1 million we originated in 2012. In addition to the noninterest expense reductions as a result of the merger and associated branch and operational consolidation, we have initiated a program to reduce other noninterest expenses primarily through vendor management activities which we expect to contribute to profitability in the second half of 2013.

We also expect to continue our progress to restore FNB and its subsidiaries to a satisfactory condition. In this connection, the FDIC has terminated the Granite Order, effective February 27, 2013, and while Granite is continuing to adhere to regulatory requirements relating to, among other things, maintaining minimum capital levels, continuing reduction of classified assets, improving asset quality and enhancing bank operations that continue to warrant improvement, we believe that this action acknowledges the progress we are making in this regard. CommunityOne is expected to continue to adhere to the policies, procedures and processes it has put in place to comply with the CommunityOne Order and it is our expectation that the bank merger will facilitate that compliance by, among other things, increasing CommunityOne's capital and earnings capacity and reducing operational risk through consolidation of operations, functions and processes.

http://www.sec.gov/Archives/edgar/data/764811/000076481113000006/fnbn20121231-10k.htm