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| 8-K - FORM 8-K - FNB CORP/PA/ | d466451d8k.htm |
| EX-99.2 - EX-99.2 - FNB CORP/PA/ | d466451dex992.htm |
 F.N.B. Corporation Earnings Presentation Third Quarter 2017 October 19, 2017 Exhibit 99.1 |
 2 This document contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which contain F.N.B. Corporation’s (F.N.B.) expectations or predictions of future financial or business performance or conditions. 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 F.N.B.’s 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; inflation; 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 initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; 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 and legislative and regulatory actions and reforms. F.N.B. does not undertake any obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this document. This presentation contains “snapshot” information about F.N.B. and is not intended as a full business or financial review and should be viewed in the context of all the information made available by F.N.B. in its SEC filings. To supplement its consolidated financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), F.N.B. provides additional measures of operating results, net income and earnings per share adjusted to exclude certain costs, expenses, and gains and losses. F.N.B. believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance and facilitate comparisons with the performance of F.N.B.’s peers. In the event of such a disclosure or release, the Securities and Exchange Commission’s 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. The Appendix to this presentation contains a reconciliation of the non-GAAP financial measures used by F.N.B. to the most directly comparable GAAP financial measures. While F.N.B. believes that these non-GAAP financial measures are useful in evaluating results, the information should be considered supplemental in nature and not as a substitute for or superior to the relevant financial information prepared in accordance with GAAP. The non-GAAP financial measures used by F.N.B. may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations. This information should be reviewed in conjunction with F.N.B.’s financial results disclosed on October 19, 2017, and in its periodic filings with the SEC. 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 F.N.B.'s Annual Report on Form 10-K for the year ended December 31, 2016, our subsequent quarterly 2017 Form 10- Q's (including the risk factors and risk management discussions) and F.N.B.'s 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 presentation. Cautionary Statement Regarding Forward-Looking Information and Non-GAAP Financial Information |
 3 • Record revenue and record net income • Continued to grow loans and deposits • Effective expense control • Improved efficiency ratio • Continued satisfactory asset quality • Positioned to deliver on our long-term financial objectives Key Messages |
 3Q17 Financial Highlights (1) Includes adjustments to reflect operating results, a non-GAAP measure, refer to Appendix for non-GAAP to GAAP Reconciliation details and the cautionary statement preamble for rationale for use of non-GAAP measures. (2) Annualized linked quarter organic growth results. Organic growth results exclude initial balances acquired via acquisition. As of or for the period ending 3Q17 2Q17 3Q16 Reported results Net income available to common stockholders (millions) $75.7 $72.4 $50.2 Net income per diluted common share $0.23 $0.22 $0.24 Book value per common share $13.39 $13.26 $11.72 Key operating results (non-GAAP) 1 Operating net income available to common stockholders (millions) $76.6 $73.3 $50.4 Operating net income per diluted common share $0.24 $0.23 $0.24 Total organic average loan growth 2 5.7% 6.1% 7.6% Total organic average deposit growth 2 0.8% 1.1% -1.4% Efficiency Ratio 53.1% 54.3% 54.4% Tangible common equity / tangible assets 6.87% 6.83% 6.69% Tangible book value per share $6.12 $6.00 $6.53 4 |
 (1) Metrics shown are originated portfolio metrics unless noted as a total portfolio metric. “Originated portfolio” or “Originated loans” excludes loans acquired at fair value and accounted for in accordance with ASC 805 (effective January 1, 2009), as the risk of credit loss has been considered by virtue of F.N.B.’s estimate of fair value. (2) Total portfolio metric. $ in thousands 3Q17 2Q17 3Q16 3Q17 Highlights NPLs+OREO/Total average originated loans and leases + OREO 0.91% 1.08% 1.08% • Consistent and stable credit quality results across the portfolio • Improved levels of NPLs + OREO largely driven by the sale of OREO properties • Improved levels of originated delinquency at a very solid 0.91% • Third quarter provision levels continue to exceed net charge- offs Originated Delinquency 0.91% 0.99% 1.00% Provision for credit losses 2 $16,768 $16,756 $14,639 Net charge-offs (NCOs) 2 $12,451 $11,839 $12,114 NCOs (annualized)/Total average loans and leases 2 0.24% 0.23% 0.33% NCOs (annualized)/Total average originated loans and leases 0.37% 0.38% 0.41% Allowance for credit losses/ Total originated loans and leases 1.12% 1.15% 1.23% Allowance for credit losses/ Total non-performing loans and leases 2 162.9% 152.8% 163.4% 5 Asset Quality Results 1 |
 (1) Organic growth % is annualized and excludes initial balances acquired via acquisition. (2) Includes Direct Installment, Indirect Installment, Residential mortgage and Consumer LOC portfolios. (3) Excludes time deposits. (4) Period-end as of September 30, 2017. Average, $ in millions 3Q17 2Q17 3Q16 QoQ YoY QoQ Organic 1 YoY Organic 1 3Q17 Highlights Securities $5,725 $5,607 $4,241 2.1% 35.0% • Continued growth in commercial loans concentrated in Pittsburgh, Cleveland and Baltimore markets • Growth in consumer loans driven by indirect auto and residential mortgage • Growth in average deposits reflects efforts to generate additional customer relationships • Transaction deposits 3 represent 81% of total deposits 4 • Improved loans to deposits ratio of 94.9% 4 led by period end total deposit growth of 16.5% 1 Total loans $20,654 $20,361 $14,642 1.4% 41.1% 5.7% 6.6% Commercial loans $12,956 $12,831 $8,624 1.0% 50.2% 3.9% 4.3% Consumer loans 2 $7,655 $7,477 $5,960 2.4% 28.4% 9.4% 10.1% Earning assets $26,637 $26,149 $19,045 1.9% 39.9% Total deposits $21,197 $21,155 $15,672 0.2% 35.3% 0.8% 2.3% Transaction deposits 3 $17,384 $17,357 $13,084 0.2% 32.9% 0.6% 3.4% Time deposits $3,813 $3,799 $2,588 0.4% 47.3% 1.5% -5.8% 6 Balance Sheet Highlights |
 (1) A non-GAAP measure, refer to Appendix for further information. (2) Incremental purchase accounting accretion refers to the difference between total accretion and the estimated coupon interest income on acquired loans, and cash recoveries impact refers to any associated cash recoveries on loans received in excess of the recorded investment. $ in thousands 3Q17 2Q17 3Q16 QoQ YoY 3Q17 Highlights Total interest income $263,514 $251,034 $175,110 5.0% 50.5% • Total revenue growth driven by higher net interest income • Interest income supported by continued loan growth and higher purchase accounting impact • Interest expense reflects funding mix change toward customer -based activity Total interest expense 38,283 32,619 17,604 17.4% 117.5% Net interest income $225,231 $218,415 $157,506 3.1% 43.0% Non-interest income 66,151 66,078 53,240 0.1% 24.3% Total revenue $291,382 $284,493 $210,746 2.4% 38.3% Net interest margin (FTE) 1 3.44% 3.42% 3.36% 2 bps 8 bps Incremental purchase accounting accretion impact 2 0.04% 0.01% 0.03% 3 bps 1 bps Cash recoveries impact 2 0.06% 0.02% 0.04% 4 bps 2 bps 7 Revenue Highlights |
 $ in thousands
3Q17 2Q17 3Q16 QoQ YoY 3Q17 Highlights Service charges $33,610 $33,389 $25,411 0.7% 32.3% • Growth in insurance, wealth management and mortgage banking offset by lower capital markets activity • Insurance supported by seasonal renewal activity • Wealth management results benefitted from strong equity markets, continued trust customer acquisition and growing presence in acquired markets • Mortgage banking reflects benefits from increased volume in acquired markets Trust services 5,748 5,715 5,268 0.6% 9.1% Insurance commissions and fees 5,029 4,347 4,866 15.7% 3.4% Securities commissions and fees 4,038 3,887 3,404 3.9% 18.6% Capital markets income 2,822 5,004 4,497 -43.6% -37.2% Mortgage banking operations 5,437 5,173 3,564 5.1% 52.5% Net securities gains (losses) 2,777 493 299 NM NM Other 6,690 8,070 5,932 -17.1% 12.8% Total reported non-interest income $66,151 $66,078 $53,240 0.1% 24.3% 8 Non-Interest Income |
 $ in thousands
3Q17 2Q17 3Q16 QoQ YoY 3Q17 Highlights Salaries and employee benefits $82,383 $84,899 $60,927 -3.0% 35.2% • Stable expenses reflect lower salaries and benefits expense offset by higher occupancy and equipment, other real estate owned and outside expenses • Previous infrastructure investments fully embedded in 3Q17 expense base • Year-over -year increase in total non -interest expense reflects greater scale from acquisition-related growth Occupancy and equipment 27,434 26,480 20,367 3.6% 34.7% FDIC insurance 9,183 9,376 5,274 -2.1% 74.1% Amortization of intangibles 4,805 4,813 3,571 -0.2% 34.6% Other real estate owned 1,421 1,008 1,172 41.0% 21.3% Other 37,136 35,784 29,440 3.8% 26.1% Non-interest expense before merger-related expense $162,362 $162,360 $120,751 0.0% 34.5% Merger-related expense $1,381 1,354 $299 NM NM Total non-interest expense $163,743 $163,714 $121,050 0.0% 35.3% 9 Non-Interest Expense |
 (1) Total noninterest income less net securities gains (losses) / total net interest income + noninterest income less net securities gains (losses). (2) Includes adjustments to reflect operating results, a non-GAAP measure, refer to Appendix for Non-GAAP to GAAP Reconciliation details. 10 Key Performance Indicators YTD 2017 FY 2016 Long-Term Target Strategy Maintain Low- Risk Profile Originated net charge-offs (annualized)/average loans 33 bps 34 bps 25-50 bps Remain disciplined through the cycle Drive Organic Revenue Growth Average loans Average deposits Noninterest income/revenue 1 6% 2% 23% 8% 7% 25% 7-9% 5-7% > 30% Grow and deepen customer relationships Improve Efficiency Efficiency ratio 2 54.7% 55.4% < 53% Continue to generate positive operating leverage Achieve Cost Savings Integration expense savings 25% of Yadkin expense base (complete) 40% of Metro Expense Base (complete) 25% of Yadkin expense base Focus on process improvement and synergies, while reinvesting for the future Optimize the Retail Bank Deposits/branch (at period end) $52 million $50 million Continued improvement compared to prior year Project REDI branch optimization; “Clicks to Bricks” strategy Successful Execution ROAA (operating, non-GAAP) 2 ROATCE (operating, non-GAAP) 2 0.99% 15.7% 0.95% 14.7% >1.00% >15% Deliver on FNB business Model Execution of FNB’s Long-Term Growth Strategy |
 11 Appendix Appendix |
 Ticker Institution Ticker Institution ASB Associated Banc-Corp PBCT People’s United Financial, Inc. CBSH Commerce Bancshares, Inc. PB Prosperity Bancshares, Inc. CMA Comerica, Inc. SNV Synovus Financial Corp. CFR Cullen/Frost Bankers, Inc. TCF TCF Financial Corp. EWBC East West Bancorp, Inc. UMPQ Umpqua Holdings Corp. FHN First Horizon National Corp. VLY Valley National Bancorp FRC First Republic Bank WBS Webster Financial Corp. HBHC Hancock Holding Company WTFC Wintrust Financial Corp. ISBC Investors Bancorp, Inc. ZION Zions Bancorp NYCB New York Community Bancorp 12 2017 Peer Group Listing |
 13 $ in thousands except per share amounts 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Operating net income available to common stockholders Net income available to common stockholders 75,683 $ 72,396 $ 20,969 $ 49,280 $ 50,158 $ Merger-related expense 1,381 1,354 52,724 1,649 299 Tax benefit of merger-related expense (483) (419) (17,579) (341) (105) Merger-related net securities gains - - (2,609) - - Tax expense of merger-related securities gains - - 913 - - Operating net income available to common stockholders (non-GAAP) 76,581 $ 73,331 $ 54,418 $ 50,588 $ 50,352 $ Operating net income per diluted common share Net income available to common stockholders per diluted common share 0.23 $ 0.22 $ 0.09 $ 0.23 $ 0.24 $ Merger-related expense 0.01 0.01 0.22 0.01 0.00 Tax benefit of merger-related expense (0.00) (0.00) (0.07) (0.00) (0.00) Merger-related net securities gains - - (0.01) - - Tax expense of merger-related securities gains - - 0.00 - - Operating net income per diluted common share (non-GAAP) 0.24 $ 0.23 $ 0.23 $ 0.24 $ 0.24 $ For The Quarter Ended Non-GAAP to GAAP Reconciliation |
 (1) Excludes loan servicing rights. (2) A non-GAAP measure, refer to page
13 in Appendix for more information. $ in thousands
30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Return on average tangible common equity (ROATCE) Net income available to common stockholders (annualized) 300,266 $ 290,381 $ 85,042 $ 196,049 $ 199,543 $ Amortization of intangibles, net of tax (annualized) 12,392 12,547 8,166 4,143 9,234 Tangible net income available to common stockholders (annualized) 312,658 $ 302,928 $ 93,208 $ 200,192 $ 208,777 $ Average total stockholders' equity 4,426,980 $ 4,386,438 $ 3,007,853 $ 2,573,768 $ 2,562,693 $ Less: Average preferred stockholders' equity 106,882 106,882 106,882 106,882 106,882 Less: Average intangible assets(1) 2,344,077 2,348,767 1,381,712 1,089,216 1,093,378 Average tangible common equity 1,976,022 $ 1,930,789 $ 1,519,259 $ 1,377,670 $ 1,362,433 $ Return on average tangible common equity (non-GAAP) 15.82% 15.69% 6.14% 14.53% 15.32% Operating ROATCE Operating net income avail. to common stockholders (annualized)(2) 303,825 $ 294,129 $ 220,695 $ 201,253 $ 200,314 $ Amortization of intangibles, net of tax (annualized) 12,392 12,547 8,166 4,143 9,234 Tangible operating net income avail. to common stockholders (annualized) 316,218 $ 306,676 $ 228,861 $ 205,396 $ 209,548 $ Average total stockholders' equity 4,426,980 $ 4,386,438 $ 3,007,853 $ 2,573,768 $ 2,562,693 $ Less: Average preferred stockholders' equity 106,882 106,882 106,882 106,882 106,882 Less: Average intangible assets(1) 2,344,077 2,348,767 1,381,712 1,089,216 1,093,378 Average tangible common equity 1,976,022 $ 1,930,789 $ 1,519,259 $ 1,377,670 $ 1,362,433 $ Operating return on average tangible common equity (non-GAAP) 16.00% 15.88% 15.06% 14.91% 15.38% For The Quarter Ended 14 Non-GAAP to GAAP Reconciliation |
 (1) Excludes loan servicing rights. (2) A non-GAAP measure, refer to page
16 in Appendix for more information. $ in thousands
30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Return on average tangible assets (ROATA) Net income (annualized) 308,237 $ 298,443 $ 93,191 $ 204,050 $ 207,540 $ Amortization of intangibles, net of tax (annualized) 12,392 12,547 8,166 4,143 9,234 Tangible net income (annualized) 320,629 $ 310,990 $ 101,357 $ 208,193 $ 216,774 $ Average total assets 30,910,664 $ 30,364,645 $ 24,062,099 $ 21,609,635 $ 21,386,156 $ Less: Average intangible assets(1) 2,344,077 2,348,767 1,381,712 1,089,216 1,093,378 Average tangible assets 28,566,587 $ 28,015,878 $ 22,680,387 $ 20,520,419 $ 20,292,778 $ Return on average tangible assets (non-GAAP) 1.12% 1.11% 0.45% 1.01% 1.07% Operating ROATA Operating net income (annualized)(2) 311,800 $ 302,191 $ 228,847 $ 209,253 $ 208,310 $ Amortization of intangibles, net of tax (annualized) 12,392 12,547 8,166 4,143 9,234 Tangible operating net income (annualized) 324,192 $ 314,738 $ 237,013 $ 213,396 $ 217,544 $ Average total assets 30,910,664 $ 30,364,645 $ 24,062,099 $ 21,609,635 $ 21,386,156 $ Less: Average intangible assets(1) 2,344,077 2,348,767 1,381,712 1,089,216 1,093,378 Average tangible assets 28,566,587 $ 28,015,878 $ 22,680,387 $ 20,520,419 $ 20,292,778 $ Operating return on average tangible assets (non-GAAP) 1.13% 1.12% 1.05% 1.04% 1.07% For The Quarter Ended 15 Non-GAAP to GAAP Reconciliation |
 16 (1) A non-GAAP measure, refer to reconciliation above for more information.
$ in thousands 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Operating net income Net income 77,693 $ 74,406 $ 22,979 $ 51,291 $ 52,168 $ Merger-related expense 1,381 1,354 52,724 1,649 299 Tax benefit of merger-related expense (483) (419) (17,579) (341) (105) Merger-related net securities gains - - (2,609) - - Tax expense of merger-related securities gains - - 913 - - Operating net income (non-GAAP) 78,592 75,341 56,428 52,599 52,362 Operating return on average assets (ROAA) Operating net income (annualized)(1) 311,800 $ 302,191 $ 228,847 $ 209,253 $ 208,310 $ Average total assets 30,910,664 $ 30,364,645 $ 24,062,099 $ 21,609,635 $ 21,386,156 $ Operating return on average assets (non-GAAP) 1.01% 1.00% 0.95% 0.97% 0.97% For The Quarter Ended Non-GAAP to GAAP Reconciliation |
 17 (1) Excludes loan servicing rights. $ in thousands except per share amounts 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Tangible book value per common share (at period-end) Total stockholders' equity 4,435,921 $ 4,392,438 $ 4,355,795 $ 2,571,617 $ 2,570,580 $ Less: preferred stockholders' equity 106,882 106,882 106,882 106,882 106,882 Less: intangibles(1) 2,351,707 2,346,653 2,356,800 1,085,935 1,091,876 Tangible common equity (non-GAAP) 1,977,332 $ 1,938,903 $ 1,892,113 $ 1,378,800 $ 1,371,822 $ Ending common shares outstanding 323,301,548 323,226,474 322,906,763 211,059,547 210,224,194 Tangible book value per common share (non-GAAP) 6.12 $ 6.00 $ 5.86 $ 6.53 $ 6.53 $ Tangible common equity ratio (at period-end) Total stockholders equity 4,435,921 $ 4,392,438 $ 4,355,795 $ 2,571,617 $ 2,570,580 $ Less: preferred stockholders' equity 106,882 106,882 106,882 106,882 106,882 Less: intangibles(1) 2,351,707 2,346,653 2,356,800 1,085,935 1,091,876 Tangible common equity (non-GAAP) 1,977,332 $ 1,938,903 $ 1,892,113 $ 1,378,800 $ 1,371,822 $ Total assets 31,123,295 $ 30,753,726 $ 30,190,695 $ 21,844,817 $ 21,583,914 $ Less: intangibles(1) 2,351,707 2,346,653 2,356,800 1,085,935 1,091,876 Tangible assets 28,771,588 $ 28,407,073 $ 27,833,895 $ 20,758,882 $ 20,492,038 $ Tangible common equity ratio (non-GAAP) 6.87% 6.83% 6.80% 6.64% 6.69% For The Quarter Ended Non-GAAP to GAAP Reconciliation |
 18 $ in thousands 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Efficiency Ratio (FTE) Non-interest expense 163,743 $ 163,714 $ 187,555 $ 123,806 $ 121,050 $ Less: amortization of intangibles 4,805 4,813 3,098 1,602 3,571 Less: OREO expense 1,421 1,008 983 2,401 1,172 Less: merger costs 1,381 1,354 52,724 1,649 299 Less: impairment charge on other assets - - - - - Adjusted non-interest expense
156,136 $ 156,539 $ 130,750 $ 118,154 $ 116,008 $ Net interest income 225,231 $ 218,415 $ 172,752 $ 159,283 $ 157,506 $ Taxable equivalent adjustment 5,173 4,474 3,522 3,099 2,895 Non-interest income 66,151 66,078 55,116 51,066 53,240 Less: net securities gains 2,777 493 2,625 116 299 Less: gain on redemption of trust preferred securities - - - - - Adjusted net interest income (FTE) (non-GAAP) + non-interest
income 293,778
$
288,474 $ 228,765 $ 213,332 $ 213,342 $ Efficiency Ratio (FTE) (non-GAAP) 53.15% 54.26% 57.15% 55.38% 54.38% For The Quarter Ended Non-GAAP to GAAP Reconciliation |
 19 Incremental purchase accounting accretion refers to the difference between total accretion and the estimated coupon interest income on
acquired loans, and cash recoveries impact refers to any
associated cash recoveries on loans received in excess of the recorded investment. (1) Reported on a Fully Taxable Equivalent (FTE) basis, a non-GAAP measure. $ in thousands 30-Sep-17 30-Jun-17 31-Mar-17 31-Dec-16 30-Sep-16 Components of net interest income Net interest income 225,231 $ 218,415 $ 172,752 $ 159,283 $ 157,506 $ Net interest margin (FTE)(1) 3.44% 3.42% 3.35% 3.35% 3.36% Incremental purchase accounting accretion included in net interest income 2,154 $ 504 $ 3,050 $ 2,690 $ 1,175 $ Incremental purchase accounting accretion impact to net interest margin 0.04% 0.01% 0.06% 0.06% 0.03% Cash recoveries included in net interest income 4,340 $ 1,145 $ 338 $ 1,531 $ 1,904 $ Cash recoveries impact to net interest margin 0.06% 0.02% 0.01% 0.03% 0.04% For The Quarter Ended Net Interest Income and Net Interest Margin (FTE) |