F.N.B. Corporation Reports Third Quarter 2018 Earnings Per Share of $0.30

F.N.B. Corporation Reports Third Quarter 2018 Earnings Per Share of $0.30

Earnings Per Share Increases 30% Year-over-Year

PR Newswire

PITTSBURGH, Oct. 23, 2018 /PRNewswire/ -- F.N.B. Corporation FNB reported earnings for the third quarter of 2018 with net income available to common stockholders of $98.8 million, or $0.30 per diluted common share. Comparatively, third quarter of 2017 net income available to common stockholders totaled $75.7 million, or $0.23 per diluted common share, and second quarter of 2018 net income available to common stockholders totaled $83.2 million, or $0.26 per diluted common share.

On an operating basis, third quarter of 2018 earnings per diluted common share (non-GAAP) was $0.29, excluding a $5.1 million gain recognized from the sale of Regency Finance Company (Regency). Comparatively, third quarter of 2017 operating earnings per diluted common share (non-GAAP) was $0.24, excluding the impact of $1.4 million of merger-related expenses. Second quarter of 2018 operating earnings per diluted common share was $0.27, excluding the impact of $6.6 million of branch consolidation costs, as well as the impact of a $0.9 million discretionary 401(k) contribution made following tax reform. Of the branch consolidation costs in the second quarter of 2018, $2.9 million were included in non-interest expense and $3.7 million were recorded as a loss on fixed assets reducing non-interest income.

Vincent J. Delie, Jr., Chairman, President and Chief Executive Officer, commented, "Earnings per share for the third quarter of 2018 increased 30% to $0.30 from the third quarter of 2017. The quarter's performance represents record total revenue and record net income, solid loan growth, double-digit annualized deposit growth and a 6.7% reduction in total expenses compared to the prior quarter. We are very pleased with the results that included positive operating leverage and an improved efficiency ratio of 53.7%. Return on tangible common equity of 19% reflects our commitment to driving further value creation and increasing returns for our shareholders."

Third Quarter 2018 Highlights

(All comparisons refer to the third quarter of 2017, except as noted)

  • Growth in total average loans was $1.1 billion, or 5.4%, with average commercial loan growth of $545 million, or 4.2%, and average consumer loan growth of $576 million, or 7.5%.
  • Total average deposits grew $1.9 billion, or 9.1%, including an increase in average non-interest bearing deposits of $439 million, or 7.9%, and an increase in average time deposits of $1.4 billion, or 37.9%.
  • The loan to deposit ratio was 92.9% at September 30, 2018, compared to 94.9%.
  • The net interest margin (FTE) (non-GAAP) declined 8 basis points to 3.36% from 3.44%, reflecting a 3 basis point decrease in the fully taxable equivalent adjustment related to the impact of tax reform. Included in the net interest margin of 3.36% and 3.44%, Regency contributed 8 basis points and 13 basis points, respectively.
  • Total revenue increased 6.3% to $310 million, reflecting a 4.2% increase in net interest income and a 13.1% increase in non-interest income.
  • Non-interest income increased $8.7 million, or 13.1%. Excluding the Regency gain on sale, operating non-interest income increased $3.5 million, or 5.4%, with increases in mortgage banking, wealth management and capital markets.
  • The efficiency ratio equaled 53.7%, compared to 53.1% in the third quarter of 2017, and 55.6% in the second quarter of 2018.
  • The annualized net charge-offs to total average loans ratio increased to 0.27% from 0.24%. The third quarter of 2018 included 13 basis points of net charge-offs from the mark to fair value on the Regency loans prior to the sale, with no associated provision expense.
  • The ratio of the allowance for credit losses to total loans and leases was essentially flat at 0.81%, compared to 0.82%.

Non-GAAP measures referenced in this release are used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release.  "Incremental purchase accounting accretion" refers to the difference between total accretion and the estimated coupon interest income on acquired loans. "Organic growth" refers to growth excluding the benefit of initial balances from acquisitions.

Quarterly Results Summary



3Q18



2Q18



3Q17

Reported results













Net income available to common stockholders (millions)



$

98.8





$

83.2





$

75.7



Net income per diluted common share



$

0.30





$

0.26





$

0.23



Book value per common share (period-end)



$

13.62





$

13.47





$

13.39



Operating results (non-GAAP)













Operating net income available to common stockholders (millions)



$

94.7





$

89.1





$

76.6



Operating net income per diluted common share



$

0.29





$

0.27





$

0.24



Tangible common equity to tangible assets (period-end)



6.89

%



6.79

%



6.87

%

Tangible book value per common share (period-end)



$

6.44





$

6.26





$

6.12



Average Diluted Common Shares Outstanding (thousands)



325,653





325,730





324,905



Significant items influencing earnings1 (millions)













Pre-tax merger-related expenses



$





$





$

(1.4)



After-tax impact of merger-related expenses



$





$





$

(0.9)



Pre-tax discretionary 401(k) contribution



$





$

(0.9)





$



After-tax impact of discretionary 401(k) contribution



$





$

(0.7)





$



Pre-tax gain on sale of subsidiary



$

5.1





$





$



After-tax impact of gain on sale of subsidiary



$

4.1





$





$



Pre-tax branch consolidation costs



$





$

(6.6)





$



After-tax impact of branch consolidation costs



$





$

(5.2)





$



(1) Favorable (unfavorable) impact on earnings

Year-to-Date Results Summary



2018



2017





Reported results













Net income available to common stockholders (millions)



$

266.7





$

169.0







Net income per diluted common share



$

0.82





$

0.57







Operating results (non-GAAP)













Operating net income available to common stockholders (millions)



$

268.6





$

204.3







Operating net income per diluted common share



$

0.82





$

0.69







Average Diluted Common Shares Outstanding (thousands)



325,675





296,653







Significant items influencing earnings1 (millions)













Pre-tax merger-related expenses



$





$

(55.5)







After-tax impact of merger-related expenses



$





$

(37.0)







Pre-tax merger-related net securities gains



$





$

2.6







After-tax impact of net merger-related securities gains



$





$

1.7







Pre-tax discretionary 401(k) contribution



$

(0.9)





$







After-tax impact of discretionary 401(k) contribution



$

(0.7)





$







Pre-tax gain on sale of subsidiary



$

5.1





$







After-tax impact of gain on sale of subsidiary



$

4.1





$







Pre-tax branch consolidation costs



$

(6.6)





$







After-tax impact of branch consolidation costs



$

(5.2)





$







(1) Favorable (unfavorable) impact on earnings

 

Third Quarter 2018 Results – Comparison to Prior-Year Quarter

Net interest income totaled $234.8 million, increasing $9.6 million, or 4.2%. The net interest margin (FTE) (non-GAAP) declined 8 basis points to 3.36% and included $5.9 million of incremental purchase accounting accretion and $1.5 million of cash recoveries, compared to $2.2 million and $4.3 million, respectively, in the third quarter of 2017. Regency contributed $5.6 million of net interest income, or 0.08% to net interest margin, compared to $9.0 million or 0.13%. The sale of Regency, which included $132 million of direct installment loans, closed on August 31, 2018. The impact of the tax equivalent adjustment to net interest margin decreased to 0.06%, compared to 0.09% in the same quarter last year, due primarily to the impact of tax reform. Total average earning assets increased $1.6 billion, or 5.9%, due primarily to average loan growth of $1.1 billion.

Average loans totaled $21.8 billion and increased 5.4%, due to solid growth in the commercial and consumer portfolios. Average commercial loan growth totaled $545 million, or 4.2%, led by strong commercial activity in the Cleveland and Mid-Atlantic (Greater Baltimore-Washington D.C. markets) regions and continued growth in the equipment finance and asset-based lending businesses. Average consumer loan growth was $576 million, or 7.5%, as growth in indirect auto loans of $424 million, or 30.2%, and residential mortgage loans of $379 million, or 14.9%, was partially offset by declines in average direct installment loans and consumer lines of credit.

Average deposits totaled $23.1 billion, an increase of $1.9 billion, or 9.1%, reflecting growth in non-interest bearing deposits of $439 million, or 7.9%, and growth in time deposits of $1.4 billion, or 37.9%. The growth in non-interest bearing deposits reflected continued successful efforts to attract new and larger corporate customers across our footprint. The loan-to-deposit ratio was 92.9% at September 30, 2018, compared to 94.9% at September 30, 2017.

Non-interest income totaled $74.8 million, increasing $8.7 million, or 13.1%, from the prior-year quarter, reflecting the $5.1 million gain on sale of Regency and continued growth in our fee-based businesses.  Capital markets income increased $2.3 million, or 80.7%, from the prior-year quarter, primarily attributable to higher levels of commercial swap activity across our footprint. Mortgage banking income increased $0.5 million or 9.7% from the prior-year quarter. Trust income increased $0.6 million, or 11.2%, and securities commissions increased $0.5 million, or 11.2%, reflecting organic growth and increased brokerage activity.

Non-interest expense totaled $170.7 million, increasing 4.3% compared to the prior-year quarter, which included $1.4 million of merger-related expenses. The primary driver of the increase in non-interest expense was an 8.7% increase in salaries and employee benefits as a result of increasing the minimum wage for FNB hourly employees in response to tax reform, normal annual merit increases and higher incentive compensation from business activities. The efficiency ratio (non-GAAP) was 53.7%, up slightly from 53.1%.

The ratio of non-performing loans and other real estate owned (OREO) to total loans and OREO decreased 7 basis points to 0.63%. For the originated portfolio, the ratio of non-performing loans and OREO to total loans and OREO decreased 18 basis points to 0.73%. Total delinquency remains at satisfactory levels, and total originated delinquency, defined as total past due and non-accrual originated loans as a percentage of total originated loans, improved 12 basis points to 0.79%, compared to 0.91% at September 30, 2017.

The provision for credit losses totaled $16.0 million, compared to $16.8 million in the prior-year quarter. Net charge-offs totaled $14.7 million, or 0.27% annualized of total average loans, compared to $12.5 million, or 0.24% annualized, in the prior-year quarter. For the originated portfolio, net charge-offs were $14.2 million, or 0.33% annualized of total average originated loans, compared to $13.0 million or 0.37% annualized of total average originated loans. Included in reported net charge-offs for the third quarter was $7.1 million or 0.13% for the mark to fair value on the Regency loans prior to sale with no associated provision impact. The ratio of the allowance for credit losses to total loans and leases was 0.81% and 0.82% at September 30, 2018, and September 30, 2017, respectively. For the originated portfolio, the allowance for credit losses to total originated loans was 1.00%, compared to 1.12% at September 30, 2017.

The effective tax rate was 18.0%, compared to 29.9%, reflecting the passage of the Tax Cuts and Jobs Act (TCJA), which lowered the U.S. corporate income tax rate from 35% to 21% as of January 1, 2018.

The tangible common equity to tangible assets ratio (non-GAAP) increased 2 basis points to 6.89% at September 30, 2018, compared to 6.87% at September 30, 2017. The tangible book value per common share (non-GAAP) was $6.44 at September 30, 2018, an increase of $0.32 from September 30, 2017.

Third Quarter 2018 Results – Comparison to Prior Quarter

Net interest income totaled $234.8 million, decreasing $4.6 million or 1.9%. The net interest margin (FTE) (non-GAAP) declined 15 basis points to 3.36% and included $5.9 million of incremental purchase accounting accretion and $1.5 million of cash recoveries, compared to $5.8 million and $10.2 million, respectively, in the second quarter. Regency contributed $5.6 million to net interest income, or 0.08% to net interest margin, compared to $8.5 million, or 0.12%, due to the timing of the transaction close. Total average earning assets increased $457 million, or 6.5% annualized, due to average loan growth of $330 million and a $128 million increase in average securities.

Average loans totaled $21.8 billion and increased 6.1% annualized, with average commercial loan growth of $90 million, or 2.7% annualized, and average consumer loan growth of $240 million, or 11.9% annualized.  Commercial balances included growth of $53 million, or 18.5%, in commercial leases, while consumer balances reflected continued growth in indirect auto loans of $205 million, or 50.1% annualized, and residential mortgage loans of $100 million, or 14.2% annualized, partially offset by declines in direct installment loans and consumer lines of credit.

Average deposits totaled $23.1 billion and increased $638 million, or 11.3% annualized, due primarily to growth in average time deposits and average non-interest bearing deposits of $445 million and $202 million, respectively. The growth in non-interest bearing deposits primarily reflected successful efforts to attract new and larger corporate customers during the quarter. The loan-to-deposit ratio was 92.9% at September 30, 2018, compared to 96.1% at June 30, 2018.

Non-interest income totaled $74.8 million, increasing $9.9 million, or 15.3%, from the prior quarter. Excluding the previously-mentioned gain on the sale of Regency in the third quarter of 2018 and branch consolidation-related loss on fixed assets in the second quarter of 2018, non-interest income increased $1.1 million or 6.6% annualized. This was primarily due to an increase in service charges of $0.8 million and an increase in insurance commissions and fees of $0.4 million. Additionally, mortgage banking, capital markets, and wealth management produced strong fee income contributions, consistent with the prior quarter.

Non-interest expense totaled $170.7 million, a decrease of $12.3 million, or 6.7%, compared to the prior quarter, which included branch consolidation expenses of $2.9 million and a $0.9 million discretionary 401(k) contribution made following tax reform. Excluding these items, non-interest expense decreased $8.5 million or 4.7%. The primary driver of the third quarter decrease in non-interest expense was a 9.3% decrease in salaries and employee benefits.  This was partly attributable to a medical insurance claim of $2.6 million and a $1.0 million payroll tax rate adjustment, both recognized in the second quarter, as well as branch consolidations in the second quarter and the sale of Regency. The efficiency ratio (non-GAAP) improved to 53.7% from 55.6%.

The ratio of non-performing loans and OREO to total loans and OREO increased 2 basis points to 0.63%. For the originated portfolio, the ratio of non-performing loans and OREO to total loans and OREO increased 2 basis points to 0.73%. Total delinquency remains at satisfactory levels, and total originated delinquency, defined as total past due and non-accrual originated loans as a percentage of total originated loans, increased 11 basis points to 0.79%, compared to 0.68% at June 30, 2018.

The provision for credit losses totaled $16.0 million, compared to $15.6 million in the prior quarter. Net charge-offs totaled $14.7 million, or 0.27% annualized of total average loans, compared to $18.2 million, or 0.34% annualized, in the prior quarter. For the originated portfolio, net charge-offs were $14.2 million, or 0.33% annualized of total average originated loans, compared to $14.8 million or 0.36% annualized of total average originated loans. Third quarter net charge-offs included $7.1 million, or 0.13% on a GAAP basis, from the mark to fair value on the Regency loans prior to the sale, while second quarter net charge-offs included $6.3 million, or 0.12%, related to a sale of non-performing loans. Both actions had no associated provision expense. The ratio of the allowance for credit losses to total loans and leases was 0.81% and 0.82% at September 30, 2018 and June 30, 2018, respectively. For the originated portfolio, the allowance for credit losses to total originated loans declined to 1.00% from 1.02% at June 30, 2018.

The effective tax rate was 18.0%, compared to 19.4% in the prior quarter. The decrease is primarily attributable to adjustments made to the provisional deferred tax remeasurement related to the passage of the TCJA.

The tangible common equity to tangible assets ratio (non-GAAP) increased 10 basis points to 6.89% at September 30, 2018, compared to 6.79% at June 30, 2018. The tangible book value per common share (non-GAAP) was $6.44 at September 30, 2018, an increase of $0.18 from June 30, 2018.

September 30, 2018 Year-To-Date Results - Comparison to Prior Year-To-Date Period

Net interest income totaled $700.2 million, increasing $83.8 million, or 13.6%, reflecting average earning asset growth of $3.1 billion, or 12.4%, due to the benefit of balances acquired on March 11, 2017, and organic growth. The net interest margin (FTE) (non-GAAP) expanded 1 basis point to 3.42%, reflecting higher yields on earning assets mostly offset by higher rates paid on deposits and borrowings. The first nine months of 2018 included $10.8 million of higher incremental purchase accounting accretion and $6.9 million of higher cash recoveries, compared to the first nine months of 2017. The tax-equivalent adjustment to net interest margin was 0.05%, compared to 0.07%, primarily due to the lower federal statutory tax rate.

Average loans totaled $21.5 billion, an increase of $2.4 billion, or 12.4%, due to the benefit from acquired balances and continued organic growth. Organic growth in total average loans equaled $1.1 billion, or 5.4%. Organic growth in average commercial loans totaled $572 million, or 4.4%. Total average organic consumer loan growth of $529 million, or 7.1%, was led by strong growth in residential mortgage loans of $393 million and indirect auto loans of $329 million, partially offset by declines in consumer credit lines and direct installment balances. Average deposits totaled $22.6 billion and increased $2.8 billion, or 13.9%, due to the benefit of acquired balances and average organic growth of $1.4 billion or 6.8%.

Non-interest income totaled $207.2 million, increasing $19.9 million, or 10.6%.  Excluding the $5.1 million gain on the sale of Regency and $3.7 million loss on fixed assets related to branch consolidations in 2018 and the $2.6 million merger-related net securities gains in 2017, non-interest income increased $21.0 million, or 11.4%, attributable to the expanded operations in North and South Carolina and continued growth of our fee-based businesses of wealth management, capital markets, mortgage banking and insurance.

Non-interest expense totaled $524.8 million, increasing $9.8 million, or 1.9%. The first nine months of 2018 included $2.9 million of branch consolidation expenses and a $0.9 million discretionary 401(k) contribution made following tax reform, while the first nine months of 2017 included $55.5 million of merger-related expenses. Excluding these expenses, total non-interest expense increased $61.5 million, or 13.4%, with the increase primarily attributable to the expanded operations in North and South Carolina. The efficiency ratio (non-GAAP) was 55.0%, compared to 54.7% in the first nine months of 2017.

The provision for credit losses was $46.0 million for the first nine months of 2018, compared to $44.4 million for the first nine months of 2017. Net charge-offs totaled $43.5 million, or 0.27% annualized of total average loans, compared to $32.4 million, or 0.23%, in the first nine months of 2017. Originated net charge-offs were 0.33% annualized of total average originated loans for both nine-month periods. Net charge-offs during 2018 included $13.4 million, or 0.08%, on a GAAP basis, related to a sale of nonperforming loans and the sale of Regency. Both actions had no associated provision expense.

The effective tax rate was 19.0%, compared to 28.4%, reflecting the passage of the TCJA, which lowered the U.S. corporate income tax rate from 35% to 21% as of January 1, 2018.  The effective tax rate for the first nine months of 2017 was affected by merger-related items.

Use of Non-GAAP Financial Measures and Key Performance Indicators

To supplement our Consolidated Financial Statements presented in accordance with GAAP, we use certain non-GAAP financial measures, such as operating net income available to common stockholders, operating earnings per diluted common share, return on average tangible equity, return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible equity to tangible assets, the ratio of tangible common equity to tangible assets, efficiency ratio, and net interest margin (FTE) to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to assess their performance and trends.

These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for or superior to, our reported results prepared in accordance with GAAP. When non-GAAP financial measures are disclosed, the Securities and Exchange Commission's (SEC) Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the heading "Reconciliations of Non-GAAP Financial Measures and Key Performance Indicators to GAAP".

Management believes charges such as merger expenses, branch consolidation costs and special one-time employee 401(k) contributions related to tax reform are not organic costs to run our operations and facilities. The merger expenses and branch consolidation charges principally represent expenses to satisfy contractual obligations of the acquired entity or closed branch without any useful ongoing benefit to us. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. Similarly, gains derived from the sale of a business are not organic to our operations.

To provide more meaningful comparisons of net interest margin and efficiency ratio, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets (loans and investments) to make it fully equivalent to interest income earned on taxable investments (this adjustment is not permitted under GAAP).  Taxable equivalent amounts for the 2018 period were calculated using a federal income tax rate of 21% provided under the TCJA (effective January 1, 2018). Amounts for the 2017 periods were calculated using the previously applicable statutory federal income tax rate of 35%.

Cautionary Statement Regarding Forward-Looking Information

A number of statements (i) in this earnings release, (ii) in our presentations, and (iii) in our responses to questions on our conference call discussing our quarterly results and transactions, strategies and plans may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our expectations relative to business and financial metrics, our outlook regarding revenues, expenses, earnings, liquidity, asset quality and statements regarding the impact of technology enhancements and customer and business process improvements.

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are based on current expectations and assumptions that are subject to risk, uncertainties and unforeseen events which may cause actual results to differ materially from future results expressed, projected or implied by these forward-looking statements. All forward-looking statements speak only as of the date they are made and are based on information available at that time. We assume no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events, except as required by federal securities laws. Further, it is not possible to assess the effect of all risk factors on our business of the extent to which any one risk factor or compilation thereof may cause actual results to differ materially from those contained in any forward-looking statements. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Such forward-looking statements may be expressed in a variety of ways, including the use of future and present tense language expressing expectations or predictions of future financial or business performance or conditions based on current performance and trends. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "will," "should," "project," "goal," and other similar words and expressions. These forward-looking statements involve certain risks and uncertainties. In addition to factors previously disclosed in our reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; changes or errors in the methodologies, models, assumptions and estimates we use to prepare our financial statements, make business decisions and manage risks; inflation; inability to effectively grow and expand our customer bases; our ability to execute on key priorities, including successful completion of acquisitions and dispositions, business retention or expansion plans, strategic plans and attract, develop and retain key executives; and potential difficulties encountered in expanding into a new and remote geographic market; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business and technology initiatives; economic conditions in the various regions in which we operate; competitive conditions, including increased competition through internet, mobile banking, fintech, and other non-traditional competitors; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with acquisitions and divestitures; the inability to originate and re-sell mortgage loans in accordance with business plans; our inability to effectively manage our economic exposure and GAAP earnings exposure to interest rate volatility, including availability of appropriate derivative financial investments needed for interest rate risk management purposes; economic conditions; interruption in or breach of security of our information systems; the failure of third parties and vendors to comply with their obligations to us, including related to care, control, and protection of such information; the evolution of various types of fraud or other criminal behavior to which we are exposed; integrity and functioning of products, information systems and services provided by third party external vendors; changes in tax rules and regulations or interpretations including, but not limited to, the recently enacted TCJA; changes in or anticipated impact of accounting policies, standards and interpretations; ability to maintain adequate liquidity to fund our operations; changes in asset valuations; the initiation of significant legal or regulatory proceedings against us and the outcome of any significant legal or regulatory proceeding including, but not limited to, actions by federal or state authorities and class action cases, new decisions that result in changes to previously settled law or regulation, and any unexpected court or regulatory rulings; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation and legislative and regulatory actions and reforms.

The risks identified here are not exclusive. Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties described in our Annual Report on Form 10-K (including MD&A section) for the year ended December 31, 2017, our subsequent 2018 Quarterly Reports on Form 10-Q's (including the risk factors and risk management discussions) and our other subsequent filings with the SEC, which are available on our corporate website at https://www.fnb-online.com/about-us/investor-relations-shareholder-services. We have included our web address as an inactive textual reference only. Information on our website is not part of this earnings release.

Conference Call

FNB's Chairman, President and Chief Executive Officer, Vincent J. Delie, Jr., Chief Financial Officer, Vincent J. Calabrese, Jr., and Chief Credit Officer, Gary L. Guerrieri, will host a conference call to discuss the Company's financial results on Tuesday, October 23, 2018, at 8:30 AM ET.

Participants are encouraged to pre-register for the conference call at http://dpregister.com/10124339. Callers who pre-register will be provided a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.

Dial-in Access: The conference call may be accessed by dialing (844) 802-2440 or (412) 317-5133 for international callers. Participants should ask to be joined into the F.N.B. Corporation call.

Webcast Access: The audio-only call and related presentation materials may be accessed via webcast through the "Investor Relations and Shareholder Services" section of the Corporation's website at www.fnbcorporation.com. Access to the live webcast will begin approximately 30 minutes prior to the start of the call.

Presentation Materials: Presentation slides and the earnings release will also be available prior to the start of the call on the "Investor Relations and Shareholder Services" section of the Corporation's website at www.fnbcorporation.com.

A replay of the call will be available shortly after the completion of the call until midnight ET on Tuesday, October 30, 2018. The replay can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the conference replay access code is 10124339. Following the call, the related presentation materials will be posted to the "Investor Relations and Shareholder Services" section of F.N.B. Corporation's website at www.fnbcorporation.com.

About F.N.B. Corporation

F.N.B. Corporation FNB, headquartered in Pittsburgh, Pennsylvania, is a diversified financial services company operating in six states. FNB holds a significant retail deposit market share in attractive markets including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; and Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina. The Company has total assets of approximately $33 billion, and approximately 400 banking offices throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina and South Carolina.

FNB provides a full range of commercial banking, consumer banking and wealth management solutions through its subsidiary network which is led by its largest affiliate, First National Bank of Pennsylvania, founded in 1864. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, business credit, capital markets and lease financing. The consumer banking segment provides a full line of consumer banking products and services, including deposit products, mortgage lending, consumer lending and a complete suite of mobile and online banking services. FNB's wealth management services include asset management, private banking and insurance.

The common stock of F.N.B. Corporation trades on the New York Stock Exchange under the symbol "FNB" and is included in Standard & Poor's MidCap 400 Index with the Global Industry Classification Standard (GICS) Regional Banks Sub-Industry Index. Customers, shareholders and investors can learn more about this regional financial institution by visiting the F.N.B. Corporation website at www.fnbcorporation.com.

 

F.N.B. CORPORATION































(Unaudited)































(Dollars in thousands, except per share data)



































% Variance























3Q18



3Q18



For the Nine Months Ended

September 30,



%

Statement of Earnings

3Q18



2Q18



3Q17



2Q18



3Q17



2018



2017



Var.

Interest income

$

297,815





$

294,117





$

263,514





1.3





13.0





$

864,859





$

709,241





21.9



Interest expense

63,028





54,762





38,283





15.1





64.6





164,612





92,843





77.3



Net interest income

234,787





239,355





225,231





(1.9)





4.2





700,247





616,398





13.6



Provision for credit losses

15,975





15,554





16,768





2.7





(4.7)





46,024





44,374





3.7



Non-interest income:































Service charges

31,922





31,114





32,212





2.6





(0.9)





93,113





88,883





4.8



Trust services

6,395





6,469





5,748





(1.1)





11.2





19,312





17,210





12.2



Insurance commissions and fees

5,001





4,567





5,029





9.5





(0.6)





14,703





14,517





1.3



Securities commissions and fees

4,491





4,526





4,038





(0.8)





11.2





13,336





11,548





15.5



Capital markets income

5,100





5,854





2,822





(12.9)





80.7





16,168





11,673





38.5



Mortgage banking operations

5,962





5,940





5,437





0.4





9.7





17,431





14,400





21.0



Net securities gains





31





2,777





n/m





n/m





31





5,895





n/m



Other

15,963





6,388





8,088





149.9





97.4





33,132





23,219





42.7



Total non-interest income

74,834





64,889





66,151





15.3





13.1





207,226





187,345





10.6



Total revenue

309,621





304,244





291,382





1.8





6.3





907,473





803,743





12.9



Non-interest expense:































Salaries and employee benefits

89,535





98,671





82,383





(9.3)





8.7





277,532





240,860





15.2



Occupancy and equipment

27,812





29,332





27,434





(5.2)





1.4





87,177





74,893





16.4



FDIC insurance

8,821





9,167





9,183





(3.8)





(3.9)





26,822





23,946





12.0



Amortization of intangibles

3,805





3,811





4,805





(0.2)





(20.8)





11,834





12,716





(6.9)



Other real estate owned

1,492





2,233





1,421





(33.2)





5.0





5,092





3,412





49.2



Merger-related









1,381





n/m





n/m









55,459





n/m



Other

39,264





39,799





37,136





(1.3)





5.7





116,368





103,726





12.2



Total non-interest expense

170,729





183,013





163,743





(6.7)





4.3





524,825





515,012





1.9



Income before income taxes

122,917





105,677





110,871





16.3





10.9





336,624





244,357





37.8



Income taxes

22,154





20,471





33,178





8.2





(33.2)





63,893





69,279





(7.8)



Net income

100,763





85,206





77,693





18.3





29.7





272,731





175,078





55.8



Preferred stock dividends

2,010





2,010





2,010













6,030





6,030







Net income available to

common stockholders

$

98,753





$

83,196





$

75,683





18.7





30.5





$

266,701





$

169,048





57.8



Earnings per common share































Basic

$

0.30





$

0.26





$

0.23





15.4





30.4





$

0.82





$

0.57





43.9



Diluted

$

0.30





$

0.26





$

0.23





15.4





30.4





$

0.82





$

0.57





43.9



n/m - not meaningful































 

 

F.N.B. CORPORATION



















(Unaudited)



















(Dollars in thousands, except per share data)

































% Variance















3Q18



3Q18

Balance Sheets (at period end)

3Q18



2Q18



3Q17



2Q18



3Q17

Assets



















Cash and due from banks

$

397,268





$

398,641





$

433,442





(0.3)





(8.3)



Interest bearing deposits with banks

40,585





35,058





81,898





15.8





(50.4)



Cash and cash equivalents

437,853





433,699





515,340





1.0





(15.0)



Securities available for sale

3,298,894





3,002,787





2,855,350





9.9





15.5



Securities held to maturity

3,206,345





3,295,081





2,985,921





(2.7)





7.4



Loans held for sale

42,083





44,112





113,778





(4.6)





(63.0)



Loans and leases, net of unearned income

21,839,403





21,659,582





20,817,436





0.8





4.9



Allowance for credit losses

(177,881)





(176,574)





(170,016)





0.7





4.6



Net loans and leases

21,661,522





21,483,008





20,647,420





0.8





4.9



Premises and equipment, net

323,244





324,659





336,294





(0.4)





(3.9)



Goodwill

2,249,541





2,251,349





2,254,831





(0.1)





(0.2)



Core deposit and other intangible assets, net

80,290





84,096





96,876





(4.5)





(17.1)



Bank owned life insurance

533,991





532,135





498,698





0.3





7.1



Other assets

783,832





806,637





818,787





(2.8)





(4.3)



Total Assets

$

32,617,595





$

32,257,563





$

31,123,295





1.1





4.8



Liabilities



















Deposits:



















Non-interest bearing demand

$

6,018,852





$

5,926,473





$

5,569,239





1.6





8.1



Interest bearing demand

9,519,704





9,134,954





9,675,170





4.2





(1.6)



Savings

2,513,679





2,607,372





2,513,163





(3.6)







Certificates and other time deposits

5,447,751





4,870,988





4,171,599





11.8





30.6



Total Deposits

23,499,986





22,539,787





21,929,171





4.3





7.2



Short-term borrowings

3,679,380





4,334,146





3,872,301





(15.1)





(5.0)



Long-term borrowings

627,049





628,938





658,783





(0.3)





(4.8)



Other liabilities

286,316





281,450





227,119





1.7





26.1



Total Liabilities

28,092,731





27,784,321





26,687,374





1.1





5.3



Stockholders' Equity



















Preferred stock

106,882





106,882





106,882











Common stock

3,263





3,262





3,251









0.4



Additional paid-in capital

4,046,168





4,043,124





4,029,334





0.1





0.4



Retained earnings

516,865





457,326





369,861





13.0





39.7



Accumulated other comprehensive loss

(126,840)





(115,885)





(54,310)





9.5





133.5



Treasury stock

(21,474)





(21,467)





(19,097)









12.4



Total Stockholders' Equity

4,524,864





4,473,242





4,435,921





1.2





2.0



Total Liabilities and Stockholders' Equity

$

32,617,595





$

32,257,563





$

31,123,295





1.1





4.8



 

 



F.N.B. Corporation



3Q18



2Q18



3Q17

(Unaudited)







Interest



Average







Interest



Average







Interest



Average

(Dollars in thousands)



Average



Earned



Yield



Average



Earned



Yield



Average



Earned



Yield





Outstanding



or Paid



or Rate



Outstanding



or Paid



or Rate



Outstanding



or Paid



or Rate

Assets





































Interest bearing deposits with banks



$

46,588





$

345





2.93

%



$

47,783





$

267





2.24

%



$

117,602





$

320





1.08

%

Taxable investment securities  (2)



5,310,719





30,467





2.29





5,218,200





28,995





2.22





4,913,122





24,763





2.02



Non-taxable investment securities  (1)



1,030,743





9,090





3.53





995,704





8,727





3.51





812,305





8,515





4.19



Loans held for sale



47,846





723





6.03





46,667





767





6.58





139,693





2,091





5.97



Loans and leases  (1) (3)



21,774,929





260,590





4.75





21,445,030





258,680





4.84





20,654,316





232,998





4.48



Total Interest Earning Assets  (1)



28,210,825





301,215





4.24





27,753,384





297,436





4.30





26,637,038





268,687





4.01



Cash and due from banks



367,764













359,714













374,542











Allowance for credit losses



(180,387)













(182,598)













(169,283)











Premises and equipment



323,682













331,739













334,870











Other assets



3,680,919













3,685,512













3,733,497











Total Assets



$

32,402,803













$

31,947,751













$

30,910,664











Liabilities





































Deposits:





































Interest-bearing demand



$

9,324,789





16,492





0.70





$

9,287,811





13,691





0.59





$

9,376,003





9,338





0.40



Savings



2,573,673





1,636





0.25





2,620,084





1,490





0.24





2,480,626





792





0.13



Certificates and other time



5,256,660





20,047





1.51





4,811,842





15,868





1.30





3,812,916





8,857





0.92



Short-term borrowings



3,863,563





19,576





2.00





4,098,161





18,409





1.79





4,394,106





14,387





1.29



Long-term borrowings



627,524





5,277





3.34





650,562





5,304





3.27





658,495





4,909





2.96



Total Interest Bearing Liabilities



21,646,209





63,028





1.15





21,468,460





54,762





1.02





20,722,146





38,283





0.73



Non-interest bearing demand deposits



5,966,581













5,764,144













5,527,180











Other liabilities



274,005













253,637













234,358











Total Liabilities



27,886,795













27,486,241













26,483,684











Stockholders' equity



4,516,008













4,461,510













4,426,980











Total Liabilities and Stockholders' Equity



$

32,402,803













$

31,947,751













$

30,910,664











Net Interest Earning Assets



$

6,564,616













$

6,284,924













$

5,914,892











Net Interest Income (FTE) (1)







238,187













242,674













230,404







Tax Equivalent Adjustment







(3,400)













(3,319)













(5,173)







Net Interest Income







$

234,787













$

239,355













$

225,231







Net Interest Spread











3.09

%











3.28

%











3.28

%

Net Interest Margin  (1)











3.36

%











3.51

%











3.44

%





(1)

The net interest margin and yield on earning assets (all non-GAAP measures) are presented on a fully taxable equivalent (FTE) basis, which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21% in 2018 and 35% in 2017 for each period presented.

(2)

The average balances and yields earned on taxable investment securities are based on historical cost.

(3)

Average balances for loans include non-accrual loans.  Loans and leases consist of average total loans and leases less average unearned income.  The amount of loan fees included in interest income is immaterial.

 

 

F.N.B. Corporation



Nine Months Ended September 30,

(Unaudited)



2018



2017

(Dollars in thousands)







Interest



Average







Interest



Average





Average



Earned



Yield



Average



Earned



Yield





Outstanding



or Paid



or Rate



Outstanding



or Paid



or Rate

Assets

























Interest bearing deposits with banks



$

65,882





$

972





1.97

%



$

97,122





$

660





0.91

%

Federal funds sold















1,509





9





0.72



Taxable investment securities  (2)



5,192,707





86,341





2.22





4,773,606





72,373





2.02



Non-taxable investment securities  (1)



992,781





26,095





3.50





666,469





20,833





4.17



Loans held for sale



53,404





2,401





6.00





82,254





3,960





6.43



Loans and leases  (1) (3)



21,460,794





758,873





4.73





19,084,962





624,575





4.37



Total Interest Earning Assets  (1)



27,765,568





874,682





4.21





24,705,922





722,410





3.91



Cash and due from banks



362,098













336,303











Allowance for credit losses



(181,154)













(165,543)











Premises and equipment



330,698













319,901











Other assets



3,674,471













3,274,305











Total Assets



$

31,951,681













$

28,470,888











Liabilities

























Deposits:

























Interest-bearing demand



$

9,333,557





41,637





0.60





$

8,703,870





22,426





0.34



Savings



2,576,869





4,164





0.22





2,495,632





1,954





0.10



Certificates and other time



4,904,114





49,892





1.36





3,503,637





23,100





0.88



Short-term borrowings



3,981,880





53,192





1.78





3,831,883





32,020





1.11



Long-term borrowings



646,229





15,727





3.25





625,010





13,343





2.85



Total Interest Bearing Liabilities



21,442,649





164,612





1.02





19,160,032





92,843





0.65



Non-interest bearing demand deposits



5,780,770













5,140,016











Other liabilities



258,685













225,219











Total Liabilities



27,482,104













24,525,267











Stockholders' equity



4,469,577













3,945,621











Total Liabilities and Stockholders' Equity



$

31,951,681













$

28,470,888











Net Interest Earning Assets



$

6,322,919













$

5,545,890











Net Interest Income (FTE) (1)







710,070













629,567







Tax Equivalent Adjustment







(9,823)













(13,169)







Net Interest Income







$

700,247













$

616,398







Net Interest Spread











3.19

%











3.26

%

Net Interest Margin  (1)











3.42

%











3.41

%







(1)

The net interest margin and yield on earning assets (all non-GAAP measures) are presented on a fully taxable equivalent (FTE) basis, which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21% in 2018 and 35% in 2017.

(2)

The average balances and yields earned on taxable investment securities are based on historical cost.

(3)

Average balances for loans include non-accrual loans.  Loans and leases consist of average total loans and leases less average unearned income.  The amount of loan fees included in interest income is immaterial.

 

 

F.N.B. CORPORATION



















(Unaudited)



















(Dollars in thousands, except per share data)

















































For the Nine Months Ended

September 30,



3Q18



2Q18



3Q17



2018



2017

Performance ratios



















Return on average equity

8.85

%



7.66

%



6.96

%



8.16

%



5.93

%

Return on average tangible equity (1)

18.86

%



16.66

%



15.39

%



17.68

%



12.79

%

Return on average tangible common equity (1)

19.44

%



17.14

%



15.82

%



18.22

%



13.10

%

Return on average assets

1.23

%



1.07

%



1.00

%



1.14

%



0.82

%

Return on average tangible assets (1)

1.37

%



1.19

%



1.12

%



1.27

%



0.93

%

Net interest margin (FTE) (2)

3.36

%



3.51

%



3.44

%



3.42

%



3.41

%

Yield on earning assets (FTE) (2)

4.24

%



4.30

%



4.01

%



4.21

%



3.91

%

Cost of interest-bearing liabilities

1.15

%



1.02

%



0.73

%



1.02

%



0.65

%

Cost of funds

0.90

%



0.81

%



0.58

%



0.81

%



0.51

%

Efficiency ratio (1)

53.73

%



55.64

%



53.15

%



55.04

%



54.68

%

Effective tax rate

18.02

%



19.37

%



29.92

%



18.98

%



28.35

%

Capital ratios



















Equity / assets (period end)

13.87

%



13.87

%



14.25

%









Common equity / assets (period end)

13.54

%



13.54

%



13.91

%









Leverage ratio

7.75

%



7.64

%



7.64

%









Tangible equity / tangible assets (period end) (1)

7.25

%



7.14

%



7.24

%









Tangible common equity / tangible assets (period end) (1)

6.89

%



6.79

%



6.87

%









Common stock data



















Average diluted shares outstanding

325,653,131





325,730,049





324,904,768





325,674,706





296,652,796



Period end shares outstanding

324,275,186





324,258,342





323,301,548











Book value per common share

$

13.62





$

13.47





$

13.39











Tangible book value per common share (1)

$

6.44





$

6.26





$

6.12











Dividend payout ratio (common)

39.71

%



47.13

%



51.56

%



44.05

%



61.27

%





(1)

See non-GAAP financial measures section of this Press Release for additional information relating to the calculation of this item.

(2)

The net interest margin and yield on earning assets (all non-GAAP measures) are presented on a fully taxable equivalent (FTE) basis, which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21% in 2018 and 35% in 2017.











































 

 

F.N.B. CORPORATION































(Unaudited)































(Dollars in thousands)













































Percent Variance



























3Q18



3Q18















3Q18



2Q18



3Q17



2Q18



3Q17













Balances at period end































Loans and Leases:































Commercial real estate

$

8,845,740





$

8,834,322





$

8,822,023





0.1





0.3















Commercial and industrial

4,363,457





4,301,387





3,980,584





1.4





9.6















Commercial leases

346,579





337,397





238,724





2.7





45.2















Other

34,732





43,351





39,798





(19.9)





(12.7)















Commercial loans and leases

13,590,508





13,516,457





13,081,129





0.5





3.9















Direct installment

1,778,123





1,892,080





1,925,995





(6.0)





(7.7)















Residential mortgages

2,984,662





2,850,970





2,609,663





4.7





14.4















Indirect installment

1,880,649





1,746,509





1,431,273





7.7





31.4















Consumer LOC

1,605,461





1,653,566





1,769,376





(2.9)





(9.3)















Consumer loans

8,248,895





8,143,125





7,736,307





1.3





6.6















Total loans and leases

$

21,839,403





$

21,659,582





$

20,817,436





0.8





4.9





























































Percent Variance













Average balances













3Q18



3Q18



For the Nine Months Ended

September 30,



%

Loans and Leases:

3Q18



2Q18



3Q17



2Q18



3Q17



2018



2017



Var.

Commercial real estate

$

8,824,269





$

8,824,628





$

8,779,426









0.5





$

8,823,898





$

7,912,199





11.5



Commercial and industrial

4,332,422





4,290,678





3,945,756





1.0





9.8





4,278,870





3,707,970





15.4



Commercial leases

341,125





287,796





231,030





18.5





47.7





300,657





209,074





43.8



Other

46,800





51,203





43,354





(8.6)





7.9





48,389





47,115





2.7



Commercial loans and leases

13,544,616





13,454,305





12,999,566





0.7





4.2





13,451,814





11,876,358





13.3



Direct installment

1,855,193





1,880,657





1,937,394





(1.4)





(4.2)





1,873,277





1,921,129





(2.5)



Residential mortgages

2,914,294





2,813,829





2,535,398





3.6





14.9





2,817,826





2,307,958





22.1



Indirect installment

1,830,418





1,625,344





1,406,318





12.6





30.2





1,644,561





1,315,170





25.0



Consumer LOC

1,630,408





1,670,895





1,775,640





(2.4)





(8.2)





1,673,316





1,664,347





0.5



Consumer loans

8,230,313





7,990,725





7,654,750





3.0





7.5





8,008,980





7,208,604





11.1



Total loans and leases

$

21,774,929





$

21,445,030





$

20,654,316





1.5





5.4





$

21,460,794





$

19,084,962





12.4



 

 



F.N.B. CORPORATION



















(Unaudited)













Percent Variance

(Dollars in thousands)













3Q18



3Q18

Asset Quality Data

3Q18



2Q18



3Q17



2Q18



3Q17

Non-Performing Assets



















Non-performing loans (1)



















Non-accrual loans

$

79,899





$

68,696





$

88,391





16.3





(9.6)



Restructured loans

22,322





24,820





23,147





(10.1)





(3.6)



Non-performing loans

102,221





93,516





111,538





9.3





(8.4)



Other real estate owned (OREO) (2)

35,685





39,240





35,416





(9.1)





0.8



Total non-performing assets

$

137,906





$

132,756





$

146,954





3.9





(6.2)



Non-performing loans / total loans and leases

0.47

%



0.43

%



0.54

%









Non-performing loans / total originated loans and leases (3)

0.54

%



0.50

%



0.69

%









Non-performing loans + OREO / total loans and leases + OREO

0.63

%



0.61

%



0.70

%









Non-performing loans + OREO / total originated loans and leases + OREO (3)

0.73

%



0.71

%



0.91

%









Non-performing assets / total assets

0.42

%



0.41

%



0.47

%









Delinquency - Originated Portfolio (3)



















Loans 30-89 days past due

$

61,820





$

48,305





$

44,454





28.0





39.1



Loans 90+ days past due

3,972





7,227





10,278





(45.0)





(61.4)



Non-accrual loans

71,936





59,953





77,784





20.0





(7.5)



Total past due and non-accrual loans

$

137,728





$

115,485





$

132,516





19.3





3.9



Total past due and non-accrual loans / total originated loans

0.79

%



0.68

%



0.91

%









Delinquency - Acquired Portfolio (4) (5)



















Loans 30-89 days past due

$

60,832





$

43,474





$

75,839





39.9





(19.8)



Loans 90+ days past due

61,316





67,889





88,195





(9.7)





(30.5)



Non-accrual loans

7,963





8,743





10,607





(8.9)





(24.9)



Total past due and non-accrual loans

$

130,111





$

120,106





$

174,641





8.3





(25.5)



Delinquency - Total Portfolio



















Loans 30-89 days past due

$

122,652





$

91,779





$

120,293





33.6





2.0



Loans 90+ days past due

65,288





75,116





98,473





(13.1)





(33.7)



Non-accrual loans

79,899





68,696





88,391





16.3





(9.6)



Total past due and non-accrual loans

$

267,839





$

235,591





$

307,157





13.7





(12.8)





(1)

Does not include loans acquired at fair value ("acquired portfolio").



(2)

Includes all other real estate owned, including those balances acquired through business combinations that have been in acquired loans prior to foreclosure.



(3)

"Originated Portfolio" or "Originated Loans and Leases" equals loans and leases not included by definition in the Acquired Portfolio.



(4)

"Acquired Portfolio" or "Acquired Loans" equals loans acquired at fair value, accounted for in accordance with ASC 805. The risk of credit loss on these loans has been considered by virtue of our estimate of acquisition-date fair value and these loans are considered accruing as we primarily recognize interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.  Because acquired loans are initially recorded at an amount estimated to be collectible, losses on such loans, when incurred, are first applied against the non-accretable difference established in purchase accounting and then to any allowance for credit losses recognized subsequent to acquisition.



(5)

Represents contractual balances.



 

 

































F.N.B. CORPORATION































(Unaudited)













Percent

Variance









(Dollars in thousands)













3Q18



3Q18



For the Nine Months Ended

September 30,



%

Allowance Rollforward

3Q18



2Q18



3Q17



2Q18



3Q17



2018



2017



Var.

































Allowance for Credit Losses - Originated Portfolio (2)































Balance at beginning of period

$

172,615





$

172,410





$

159,092





0.1





8.5





$

168,682





$

150,791





11.9



Provision for credit losses

14,853





15,036





17,175





(1.2)





(13.5)





44,659





46,050





(3.0)



Net loan charge-offs

(14,157)





(14,831)





(13,033)





(4.5)





8.6





(40,030)





(33,607)





19.1



Allowance for credit losses - originated portfolio (2)

$

173,311





$

172,615





$

163,234





0.4





6.2





$

173,311





$

163,234





6.2



Allowance for credit losses (originated loans and leases) /

   total originated loans and leases (2)

1.00

%



1.02

%



1.12

%





















Allowance for credit losses (originated loans and leases) /

   total non-performing loans (1)

183.87

%



203.62

%



161.73

%





















Net loan charge-offs on originated loans and leases (annualized) /

   total average originated loans and leases (2)

0.33

%



0.36

%



0.37

%











0.33

%



0.33

%





Allowance for Credit Losses - Acquired Portfolio (3)































Balance at beginning of period

$

3,959





$

6,837





$

6,607





(42.1)





(40.1)





$

6,698





$

7,268





(7.8)



Provision for credit losses

1,122





518





(407)





116.6





(375.7)





1,365





(1,676)





(181.4)



Net loan (charge-offs)/recoveries

(511)





(3,396)





582





(85.0)





(187.8)





(3,493)





1,190





(393.5)



Allowance for credit losses - acquired portfolio (3)

$

4,570





$

3,959





$

6,782





15.4





(32.6)





$

4,570





$

6,782





(32.6)



Allowance for Credit Losses - Total Portfolio































Balance at beginning of period

$

176,574





$

179,247





$

165,699





(1.5)





6.6





$

175,380





$

158,059





11.0



Provision for credit losses

15,975





15,554





16,768





2.7





(4.7)





46,024





44,374





3.7



Net loan (charge-offs)/recoveries

(14,668)





(18,227)





(12,451)





(19.5)





17.8





(43,523)





(32,417)





34.3



Total allowance for credit losses

$

177,881





$

176,574





$

170,016





0.7





4.6





$

177,881





$

170,016





4.6



Allowance for credit losses / total loans and leases

0.81

%



0.82

%



0.82

%





















Net loan charge-offs (annualized) / total average loans and leases

0.27

%



0.34

%



0.24

%











0.27

%



0.23

%











(1)

Does not include loans acquired at fair value ("acquired portfolio").



(2)

"Originated Portfolio" or "Originated Loans and Leases" equals loans and leases not included by definition in the Acquired Portfolio.



(3)

"Acquired Portfolio" or "Acquired Loans" equals loans acquired at fair value, accounted for in accordance with ASC 805. The risk of credit loss on these loans has been considered by virtue of our estimate of acquisition-date fair value and these loans are considered accruing as we primarily recognize interest income through accretion of the difference between the carrying value of these loans and their expected cash flows.  Because acquired loans are initially recorded at an amount estimated to be collectible, losses on such loans, when incurred, are first applied against the non-accretable difference established in purchase accounting and then to any allowance for credit losses recognized subsequent to acquisition.



 

 

F.N.B. CORPORATION































(Unaudited)































(Dollars in thousands, except per share data)































































RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS TO GAAP

We believe the following non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and facilitate comparisons with the performance of our peers.  The non-GAAP financial measures we use may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with U.S. GAAP.  The following tables summarize the non-GAAP financial measures included in this press release and derived from amounts reported in our financial statements.















% Variance























3Q18



3Q18



For the Nine Months

Ended

September 30,



%

Operating net income available to common stockholders:

3Q18



2Q18



3Q17



2Q18



3Q17



2018



2017



Var.

Net income available to common stockholders

$

98,753





$

83,196





$

75,683













$

266,701





$

169,048







Merger-related expense









1,381

















55,459







Tax benefit of merger-related expense









(483)

















(18,481)







Merger-related net securities gains

























(2,609)







Tax expense of merger-related net securities gains

























913







Discretionary 401(k) contribution





874

















874











Tax benefit of discretionary 401(k) contribution





(184)

















(184)











Gain on sale of subsidiary

(5,135)





















(5,135)











Tax expense of gain on sale of subsidiary

1,078





















1,078











Branch consolidation costs





6,616

















6,616











Tax benefit of branch consolidation costs





(1,389)

















(1,389)











Operating net income available to common stockholders (non-GAAP)

$

94,696





$

89,113





$

76,581





6.3





23.7





$

268,561





$

204,330





31.4



































Operating earnings per diluted common share:































Earnings per diluted common share

$

0.30





$

0.26





$

0.23













$

0.82





$

0.57







Merger-related expense









0.01

















0.19







Tax benefit of merger-related expense

























(0.06)







Merger-related net securities gains

























(0.01)







Tax expense of merger-related net securities gains































Discretionary 401(k) contribution































Tax benefit of discretionary 401(k) contribution































Gain on sale of subsidiary

(0.02)





















(0.02)











Tax expense of gain on sale of subsidiary

0.01





















0.01











Branch consolidation costs





0.02

















0.02











Tax benefit of branch consolidation costs





(0.01)

















(0.01)











Operating earnings per diluted common share

(non-GAAP)

$

0.29





$

0.27





$

0.24





7.4





20.8





$

0.82





$

0.69





18.8



 

 

F.N.B. CORPORATION









(Unaudited)



















(Dollars in thousands, except per share data)













For the Nine Months Ended

September 30,



3Q18



2Q18



3Q17



2018



2017

Return on average tangible equity:



















Net income (annualized)

$

399,766





$

341,762





$

308,237





$

364,640





$

234,078



Amortization of intangibles, net of tax (annualized)

11,926





12,077





12,392





12,499





11,051



Tangible net income (annualized) (non-GAAP)

$

411,692





$

353,839





$

320,629





$

377,139





$

245,129























Average total stockholders' equity

$

4,516,008





$

4,461,510





$

4,426,980





$

4,469,577





$

3,945,621



Less:  Average intangibles (1)

(2,332,926)





(2,337,249)





(2,344,077)





(2,336,627)





(2,028,377)



Average tangible stockholders' equity (non-GAAP)

$

2,183,082





$

2,124,261





$

2,082,903





$

2,132,950





$

1,917,244























Return on average tangible equity (non-GAAP)

18.86

%



16.66

%



15.39

%



17.68

%



12.79

%

Return on average tangible common equity:



















Net income available to common stockholders (annualized)

$

391,790





$

333,699





$

300,266





$

356,579





$

226,017



Amortization of intangibles, net of tax (annualized)

11,926





12,077





12,392





12,499





11,051



Tangible net income available to common stockholders (annualized) (non-GAAP)

$

403,716





$

345,776





$

312,658





$

369,078





$

237,068























Average total stockholders' equity

$

4,516,008





$

4,461,510





$

4,426,980





$

4,469,577





$

3,945,621



Less:  Average preferred stockholders' equity

(106,882)





(106,882)





(106,882)





(106,882)





(106,882)



Less:  Average intangibles (1)

(2,332,926)





(2,337,249)





(2,344,077)





(2,336,627)





(2,028,377)



Average tangible common equity (non-GAAP)

$

2,076,200





$

2,017,379





$

1,976,021





$

2,026,068





$

1,810,362























Return on average tangible common equity (non-GAAP)

19.44

%



17.14

%



15.82

%



18.22

%



13.10

%

Return on average tangible assets:



















Net income (annualized)

$

399,766





$

341,762





$

308,237





$

364,640





$

234,078



Amortization of intangibles, net of tax (annualized)

11,926





12,077





12,392





12,499





11,051



Tangible net income (annualized) (non-GAAP)

$

411,692





$

353,839





$

320,629





$

377,139





$

245,129























Average total assets

$

32,402,803





$

31,947,751





$

30,910,664





$

31,951,681





$

28,470,888



Less:  Average intangibles (1)

(2,332,926)





(2,337,249)





(2,344,077)





(2,336,627)





(2,028,377)



Average tangible assets (non-GAAP)

$

30,069,877





$

29,610,502





$

28,566,587





$

29,615,054





$

26,442,511























Return on average tangible assets (non-GAAP)

1.37

%



1.19

%



1.12

%



1.27

%



0.93

%

Tangible book value per common share:



















Total stockholders' equity

$

4,524,864





$

4,473,242





$

4,435,921











Less:  preferred stockholders' equity

(106,882)





(106,882)





(106,882)











Less:  intangibles (1)

(2,329,830)





(2,335,445)





(2,351,707)











Tangible common equity (non-GAAP)

$

2,088,152





$

2,030,915





$

1,977,332































Common shares outstanding

324,275,186





324,258,342





323,301,548































Tangible book value per common share (non-GAAP)

$

6.44





$

6.26





$

6.12































(1) Excludes loan servicing rights



















 

 

F.N.B. CORPORATION



















(Unaudited)



















(Dollars in thousands)













For the Nine Months Ended

September 30,



3Q18



2Q18



3Q17



2018



2017

Tangible equity / tangible assets (period end):



















Total stockholders' equity

$

4,524,864





$

4,473,242





$

4,435,921











Less:  intangibles (1)

(2,329,830)





(2,335,445)





(2,351,707)











Tangible equity (non-GAAP)

$

2,195,034





$

2,137,797





$

2,084,214































Total assets

$

32,617,595





$

32,257,563





$

31,123,295











Less:  intangibles (1)

(2,329,830)





(2,335,445)





(2,351,707)











Tangible assets (non-GAAP)

$

30,287,765





$

29,922,118





$

28,771,588































Tangible equity / tangible assets (period end) (non-GAAP)

7.25

%



7.14

%



7.24

%









Tangible common equity / tangible assets (period end):



















Total stockholders' equity

$

4,524,864





$

4,473,242





$

4,435,921











Less:  preferred stockholders' equity

(106,882)





(106,882)





(106,882)











Less:  intangibles(1)

(2,329,830)





(2,335,445)





(2,351,707)











Tangible common equity (non-GAAP)

$

2,088,152





$

2,030,915





$

1,977,332































Total assets

$

32,617,595





$

32,257,563





$

31,123,295











Less:  intangibles (1)

(2,329,830)





(2,335,445)





(2,351,707)











Tangible assets (non-GAAP)

$

30,287,765





$

29,922,118





$

28,771,588































Tangible common equity / tangible assets (period end) (non-GAAP)

6.89

%



6.79

%



6.87

%





























KEY PERFORMANCE INDICATORS



















Efficiency ratio (FTE):



















Total non-interest expense

$

170,729





$

183,013





$

163,743





$

524,825





$

515,012



Less:  amortization of intangibles

(3,805)





(3,811)





(4,805)





(11,834)





(12,716)



Less:  OREO expense

(1,492)





(2,233)





(1,421)





(5,092)





(3,412)



Less:  merger-related expense









(1,381)









(55,459)



Less: discretionary 401(k) contribution





(874)









(874)







Less:  branch consolidation costs





(2,939)









(2,939)







Adjusted non-interest expense

$

165,432





$

173,156





$

156,136





$

504,086





$

443,425























Net interest income

$

234,787





$

239,355





$

225,231





$

700,247





$

616,398



Taxable equivalent adjustment

3,400





3,319





5,173





9,823





13,169



Non-interest income

74,834





64,889





66,151





207,226





187,345



Less:  net securities gains





(31)





(2,777)





(31)





(5,895)



Less:  gain on sale of subsidiary

(5,135)













(5,135)







Add:  branch consolidation costs





3,677









3,677







Adjusted net interest income (FTE) + non-interest income

$

307,886





$

311,209





$

293,778





$

915,807





$

811,017























Efficiency ratio (FTE) (non-GAAP)

53.73

%



55.64

%



53.15

%



55.04

%



54.68

%

(1) Excludes loan servicing rights



















 

 

Cision View original content:http://www.prnewswire.com/news-releases/fnb-corporation-reports-third-quarter-2018-earnings-per-share-of-0-30--300735725.html

SOURCE F.N.B. Corporation

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