F.N.B. Corporation Q2 FY2025 earnings call

• Strong financial performance: Second quarter net income $130.7M, $0.36 per share. Linked-quarter revenue growth 6.5% from net interest and noninterest income at record levels. Pre-provision net revenue up 16% to $192M.
• Capital growth: CET1 ratio near 11%, tangible common equity 8.5%, tangible book value per share $11.14 (up 13% YOY). Repurchased 725,000 shares at $13.85.
• Noninterest income: Record $91M, driven by debt capital markets, international banking, customer swap activity, etc.
• Digital and AI initiatives: Integrated eStore common app into in-branch origination, launched business deposit account origination, realigned org structure to focus on digital, data science, AI.
• Credit quality: Asset quality improved; total delinquency 62 bps (down 13 bps), NPLs/OREO 34 bps (down 14 bps), net charge-offs 25 bps. Criticized loans down 4.5%, nonowner CRE metrics improved.

F.N.B. reported net income available to common shareholders of $130.7 million, or $0.36 per share in the second quarter. Linked-quarter revenue growth was 6.5%, driven by net interest income of $347 million and noninterest income of $91 million (both record levels). Pre-provision net revenue rose 16% to $192 million. Capital levels are at record highs: CET1 ratio approaching 11%, tangible common equity at 8.5%, and tangible book value per share at $11.14 (up 13% year-over-year). F.N.B. repurchased 725,000 shares this quarter. Average total deposits grew to over $37 billion, with a noninterest-bearing demand deposit level of 26%. The loan-to-deposit ratio ended the quarter at 91.9%.

• Balance sheet: Period-end loans and deposits expected to grow mid-single digits full year.
• Net interest income: Revised full year guidance $1.37B-$1.39B. Third quarter expected in upper half of $345M-$355M.
• Noninterest income: Full year range $355M-$365M, third quarter $87.5M-$92.5M.
• Noninterest expense: Full year $975M-$985M (up $10M on low end), third quarter $240M-$250M.
• Provision: Range $85M-$100M (down $5M on high end).
• Tax rate: 21%-22%.

• Economic uncertainty: Impact on loan portfolio, tariff/geopolitical events, fluid tariff situation.
• Interest rate risk: Uncertainty around Fed rate cuts, impact on margin/net interest income.
• Competitive environment: Impact on deposit gathering/market share.

Q: Maybe one for Vince on the margin guidance to start...

A: Vincent J. Calabrese states the margin is flattish to up a tick, with factors like earning asset growth, lower cost of funds, and Fed rate cuts baked into guidance.

Q: Russell Gunther from D.A. Davidson on deposit costs...

A: Vincent J. Calabrese and Vincent J. Delie discuss deposit cost levels, pipeline of commercial deposit prospects, and strategies to capture Fed cut benefits.

Q: Casey Haire from Autonomous Research on M&A...

A: Vincent J. Delie mentions minimal recent M&A activity, focusing on organic growth via digital/AI initiatives and de novo expansion.

Q: Timur Braziler from Wells Fargo on loan growth composition...

A: Vincent J. Delie and Gary Lee Guerrieri discuss shift from mortgage to commercial loan growth, with strong C&I pipeline and CRE portfolio decline.

Q: Kelly Motta from KBW on capital base...

A: Vincent J. Calabrese and Vincent J. Delie talk about capital management, CET1 ratio as operating floor, and flexibility in share repurchase/dividend decisions.

Q: Manuel Navas from D.A. Davidson & Company on deposit growth...

A: Vincent J. Delie and Vincent J. Calabrese discuss organic deposit growth, strong deposit franchise, and digital/AI initiatives to drive deposit mix and growth.

Q: Brian Martin from Janney Montgomery on margin and long-term outlook...

A: Vincent J. Delie and Christopher Chan comment on margin trends, long-term potential from normalized yield curve, and continued focus on organic growth.