F.N.B. Corporation Q4 FY2025 earnings call

• Focused on resetting balance sheet in 2025, managing loan concentrations and improving loan-to-deposit ratio.
• Launched Clicks-to-Bricks strategy 10 years ago, introduced innovative solutions like eStore and common application, and payment switch this quarter.
• Expanded AI and data analytics usage to drive efficiency and revenue growth. Achieved annual cost savings of $10-20 million since 2019 and expect higher savings in 2026 through automation and process improvements.
• Strong credit results with asset quality metrics at very strong levels, credit migration positive since Q1, CRE credit metrics improved.
• Fourth quarter operating net income record, total revenues record, operating pre-provision net revenue grew 21.5% year-over-year.

Fourth quarter operating net income available to common shareholders was $182 million or $0.50 per diluted common share. Full year 2025 revenue was $1.8 billion, operating net income available to common shareholders was $577 million, and operating earnings per diluted common share was $1.59. Net interest income grew 9% year-over-year. Noninterest income was record. Loan-to-deposit ratio was 89.7% at year-end. Asset quality metrics were strong with total delinquency at 71 basis points, NPLs and OREO at 31 basis points, net charge-offs at 19-20 basis points. CRE concentration was 197%. Equipment Finance business is a core element of strategy. Mortgage loans transferred to held for sale in December with sale expected in Q1 2026. Fourth quarter average loans and leases $35 billion, average deposits $38.6 billion, net interest income $365.4 million, noninterest income $92.3 million, noninterest expense $256.5 million, efficiency ratio 53.8%.

Full year 2026 period-end loans and deposits expected to grow mid-single digits. Net interest income expected $1.495B - $1.535B, first quarter net interest income $355M - $365M. Noninterest income expected $370M - $390M, first quarter $90M - $95M. Noninterest expense expected $1B - $1.02B, first quarter $255M - $260M. Provision expense expected $85M - $105M. Full year effective tax rate 21% - 22%.

Q: On fee income side, what might get towards upper end of 2026 guide?

A: Diversification, newer businesses contributing, strong performance from core fee-based businesses, macroeconomic environment favorable for mortgage banking, treasury management growth, derivatives, public finance division, M&A advisory.

Q: On operating leverage in 2026, thoughts?

A: PPNR had noise between quarters, guidance includes meaningful increase in PPNR and operating leverage, expenses growing low single digits, many expense initiatives completed, leveraging digital investment and AI/data analytics for efficiency.

Q: On loan growth outlook for 2026, mid-single digits, resi portfolio mid-single digits, C&I and CRE expected to lead?

A: Underlying production strong, loan-to-deposit ratio gives capacity, capital generation supports growth, CRE concentration low, line utilization low.

Q: On capital, CET1 11.4%, thoughts on managing in 2026, flexing CRE concentration?

A: Strong internal capital generation, could originate nearly $1B in CRE loans without changing concentration, buybacks attractive, dividend discussion with Board, capital deployment focus.

Q: On margin, interest-bearing deposit beta trend in 2026?

A: Still think mid-30s terminal beta, end of year likely around 30%, room to bring down deposit rates.

Q: On provision guide, assumptions?

A: ACL ratio holds, supports mid-single-digit growth, charge-off outlook at 20 bps level.

Q: On capital generation, above 12% CET1 possible, thoughts on too much capital?

A: Dividend discussion, buybacks at or higher than last year, loan growth activity will affect capital ratio, deploying capital in productive ways to drive returns.

Q: On stock attractiveness and M&A, stock still attractive, no bright line for buyback, M&A priority on internal growth, opportunistic if good fit.

Q: On operating leverage and efficiency ratio, sustainable low 50s?

A: Automation, digitization, revenue generation through data analysis, retail bank efficient, digitization of retail delivery channel helps gain efficiency.

Q: On lending sentiment and growth timing, loan growth back-ended, C&I growth mid-year, deposit prospects solid, mortgage sale to open capacity.

Q: On loan pricing, how it plays into margin outlook?

A: CRE pricing firm, C&I pricing competitive with threshold for returns, look at broader relationship for returns, new loans in Q4 came on at higher rate.