F.N.B. (FNB) Q2 Earnings call transcript Jul 18, 2024

F.N.B. Corporation's latest earnings call, led by Chairman, President, and CEO Vincent J. Delie, showcased a solid second quarter performance with net income available to common shareholders reaching $123 million or $0.34 per diluted common share. This robust result was driven by the company's strategic focus on gaining market share through loan and deposit growth, diversified revenue streams, and managing risk.

Loan and Deposit Growth Exceeds Expectations

The company reported a 3.6% increase in loan and deposit growth, which exceeded the published H8 data for both large and small institutions. This growth was fueled by investments in the digital eStore, which saw total interactions increase by 22% year-over-year. Commercial loans grew significantly, particularly in the Carolinas, with double-digit year-over-year growth across the region. The increase in FNB's commercial real estate portfolio was also noteworthy, with fundings on previously originated projects contributing to the growth.

Consumer loans also grew by 5% linked quarter, led by growth in residential mortgages. The company's strategy of serving the purchase market and expanding its mortgage banker team has led to increased households and deposit share growth. Deposits benefited from seasonal inflows and targeted promotions, with noninterest-bearing deposits ending the quarter over $10 billion, an annualized increase of 3.2% in the prior quarter.

Diversifying Revenue Streams and Managing Risk

FNB's strategy to diversify its revenue streams was evident in the strong performance of its noninterest income, which totaled $88 million in both the first and second quarters. This underscores the strength and range of the company's business model and its robust suite of products and services. For the first half of the year, noninterest income totaled $176 million, a 10% increase over the same period in 2023. Fee income growth was led by mortgage banking operations, which grew over 50%, along with strong wealth management revenue and treasury management fee income.

The company's balance sheet strategy is part of its proactive approach to risk management. As interest rates are expected to decrease, FNB is positioning itself to move towards a neutral interest rate position to provide stability and potential improvement in margin in a falling rate environment. The comprehensive approach to credit risk management has led to strong and stable asset quality and consistent outperformance versus peers.

Outlook and Strategic Focus

Looking ahead, FNB's guidance for the third quarter and full year of 2024 includes a mid-single-digit increase in loans on a full-year basis, with a low single-digit increase in total deposits. The company expects to maintain a superior mix of noninterest-bearing deposits to total deposits, outperforming peers.

The company's strategic focus on loan and deposit growth, diversified revenue streams, and managing risk is expected to continue driving its financial performance. With a strong capital position, ample liquidity, and a resilient balance sheet, FNB is well-positioned to navigate the ever-changing macroeconomic landscape and deliver for its customers, communities, and shareholders.

The earnings call also highlighted the company's innovative digital initiatives, including the award-winning eStore, which won Best Digital Initiative at the 2024 Banking Tech Awards USA. This recognition underscores FNB's commitment to digital engagement and leadership in the banking industry. The company's focus on innovation, coupled with its strategic initiatives, positions it well for continued success in the future.