FNB CORP/PA/ Q4 FY2024 earnings call

Financial performance

• Fourth quarter 2024 operating net income available to common shareholders was $136.7 million, or $0.38 per diluted common share. Full - year 2024 operating EPS was $1.39. Loan growth was 5% year - over - year, deposit growth was 6.9% year - over - year, non - interest income was record - breaking, CET1 ratio and tangible book value were at record highs.

Balance sheet management

• Recently completed the sale of approximately $231 million of available - for - sale securities and reinvested the proceeds into higher - yielding securities. Issued $500 million of senior debt in December with favorable execution.

Deposit business

• Built a valuable deposit franchise with superior market share in its footprint. Deposits ended 2024 at $37.1 billion, an increase of $2.4 billion from the prior year.

Technology investment

• Invested in a FinTech company whose technology will be embedded into the eStore. The eStore Common App marked its one - year anniversary with impressive consumer loan and deposit application volume growth.

Credit risk

• Credit metrics ended the year at solid levels. Conducted reviews of the non - owner CRE portfolio, reduced non - owner CRE portfolio exposure by approximately $300 million in the quarter.

Cost management

• Non - interest expense in the fourth quarter increased by $14 million quarter - on - quarter. Efficiency ratio was 56.9% in the fourth quarter, and expected to improve significantly in the second half of 2025

Loan

• 2024 full - year loan year - over - year growth was 5%. In the fourth quarter, total loans and leases increased by $222 million quarter - on - quarter, ending the year at $33.9 billion. Consumer loans grew 8% in 2024, led by residential mortgage; commercial loans and leases grew 3.3%, with the Carolina markets contributing over half of the total commercial loan growth in 2024.

Deposit

• Deposits ended 2024 at $37.1 billion, an increase of $2.4 billion from the prior year. In the fourth quarter, deposits increased by $336 million quarter - on - quarter. Interest - bearing demand balances grew 4.2% quarter - on - quarter, while time deposits declined 2.2% quarter - on - quarter. FNB holds top five deposit share in 50% of its markets and top 10 deposit share in over 80%.

Non - interest income

• Non - interest income achieved a record level of $350 million in 2024, highlighting the diversified business model and robust suite of products and services.

Capital adequacy

• The CET1 ratio reached a record 10.6%, and tangible book value per share increased 11% to a record of $10.49

2025 full - year expectations

• Period - end loans and deposits are expected to grow mid - single digits. Net interest income is expected to be between $1.345 billion and $1.385 billion, with the first quarter expected to be between $315 million and $325 million. Non - interest income is expected to be between $350 million and $370 million, with the first quarter expected to be in the range of $85 million to $90 million. Non - interest expense is expected to be between $965 million and $985 million, with the first quarter expected to be in the range of $245 million to $255 million. Provision expense is expected to be between $85 million and $105 million. The full - year effective tax rate should be between 21% and 22%.

Interest rate expectation

• Expect 25 - basis point rate cuts in March and June 2025

Interest rate risk

• Changes in the Federal Reserve's interest rate policy may affect net interest income and net interest margin.

Credit risk

• Changes in the non - owner occupied commercial real estate market may impact credit quality and asset quality.

Operational risk

• Uncertainties in technology investment and automation implementation may affect efficiency and cost control.

Regulatory risk

• Changes in the regulatory environment may increase compliance costs and operational restrictions.

Economic environment risk

• Changes in the macro - economic environment may affect customer credit demand and loan quality

Q: Daniel Tamayo from Raymond James asked about fee income initiatives and their timing and growth prospects.

A: Vince Delie said a portion of investments already reflected in expenses, some businesses like debt capital markets group started generating revenue immediately, public finance and investment banking advisory expected to start generating revenue in 2025 with quick breakeven, and build - out of existing businesses like commodities hedging and syndication's capability also driving growth.

Q: Russell Gunther from Stephens asked about deposit cost progression and market share increase plans.

A: Gary Guerrieri said FNB outperformed peers on deposit cost management on the way up and aims to outperform on the way down, with cumulative down beta forecasted, and Vince Delie mentioned focusing on areas like Virginia, Washington DC area, Carolinas, and continuing growth in mature markets with digital investments like eStore enhancements.

Q: Kelly Motta from KBW asked about commercial clients' optimism and operating leverage.

A: Vince Delie said clients are more optimistic, expecting increased capital investment and demand for loans, and Vince Calabrese and Vince Delie talked about operating leverage with focus on efficiency ratio and technology - driven automation for future expense reduction.

Q: Manuel Navas from D.A. Davidson asked about loan growth pipeline and regulatory framework impact.

A: Vince Delie said loan pipelines lower due to seasonal factors but expected to build momentum, and Vince Delie and Vince Calabrese talked about regulatory framework impact on M&A and expense burden, with expectation of more M&A and possible relief in regulatory processes.

Q: Frank Schiraldi from Piper Sandler asked about credit and regulatory framework.

A: Gary Guerrieri talked about credit reserve stability and continued reduction in non - owner occupied commercial real estate exposure, and Vince Delie talked about regulatory framework impact on M&A and expense, expecting more M&A and possible relief in regulatory processes.

Q: Brian Martin from Janney Montgomery asked about loan yields and M&A.

A: Vince Calabrese talked about loan yields in Q4, and Vince Delie talked about M&A focus on internal growth, expecting quick return on tangible book value dilution for appealing opportunities, and focus on internal performance and risk management