FNB - Earnings call transcript Q1 2018

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Operator

Good morning, everyone, and welcome to the F.N.B. Corporation First Quarter 2018 Quarterly Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today’s event is being recorded. like the I’d to call time, Mr. this to conference turn over At Relations. Lazzaro, Matt Investor go please Sir, ahead.

Matthew Lazzaro

operating Corporation we Thank viewed will in reports to Exchange release, financial This in F.N.B. Exchange measures. our release. corporate the Good available Commission be Services earnings materials the you. of prepared morning, statements not to measures call. conference non-GAAP everyone, in often contain Non-GAAP alternative results A call our will and Securities materials and financial registration presentation with our with call now Relations corporate an Chairman, and & Commission presentation our website. earnings over Vince President Please directly website. Us, the the turn and section Delie, most of filed included GAAP measures and forward-looking to our link until welcome and and reported to reports disclosures as non-GAAP replay earnings measures and non-GAAP refer CEO. and Shareholder related in of of Securities to our addition I’ll Xst, these and filed GAAP be should GAAP. and comparable statements Reconciliations to our for the About accordance and are in call to Investor our the financial this with forward-looking on and the webcast available contained be statement May posted in

Vincent Delie

earnings welcome Good today’s to call. morning and

and progress highlight an trends our review financial strategic provide Financial quarter update Joining asset Officer. Gary will Guerrieri, several will me and and on our the Officer; quality Credit Chief I’ll Gary first some initiatives. the our Today, Calabrese, Chief of discuss results. of are Vince Vince

start markets, operating of X% loan notably quarter earnings in good linked-quarter We operating in providing led share per growth XX% was and results increase year-over-year XX% businesses, banking. insurance non-interest share income was annualized management, total growth $X.XX, income positive per earnings of X%, to and by capital increase non-interest growth earnings. a wealth a delivered in reflecting XXXX. First fee-based and a of mortgage The our in average

first the a achieving early basis we from to of I on minute, quarter, fronts. a first, and our points by year-ago the making XX.X% provide of encouraged on XXX efficiency improved full-year we’re how but Additionally, more progress the in cover update an strides Vince ratio in detail quarter our towards want to number financials are expectations. will

squarely loans, see goals we’re on of driving growth good and non-interest As was linked-quarter. the growth a are more in we to loan commercial XXXX managing activity borrower beginning income, space expenses. to particularly discussed with call, the our executing our annualized It on start objectives, as focused in last X% deposits year, and while

and loans, Specifically, Greater growth we loan we by compared Carolina, The annualized D.C. grew year-end, led our quarter. increased and for had coming and strong our to quarters. loan overall commercial Carolina Charlotte of growth expect Piedmont and Pennsylvania, Cleveland Eastern C&I North and markets, XX% balances all Central the South markets. fourth to In Washington Baltimore see commercial in the contributions from the Triad, was

in the we company, on this to leaders optimistic the build momentum. to and have drive us we well-positioned about significant front place. exceptional opportunities we’re ahead, growth of Looking plan we’re commercial in and early have Across

are build that first staffed confident we We on success. are and fully our quarter we can

more group In increased has from activity, our commercial the opportunities seen equipment pick finance in addition customers. up C&I and demand to

one call. expansion objectives the of was on middle equipment to borrowers Continued last strategic and the of finance market small as business XXXX outlined

and the the increased expect trend to passage our in this tax it we impact had part In and to December, XX% continue, positive fact, reform compared has prospects. thanks ending leases annualized customers commercial of on to and the

revenue $X.X gain delivered SBA a to businesses. fee-based we $X quarter. Total across non-interest very as income, time the results on million good million sale in for our reached first Turning income surpassed

support As begun commercial SBA the contributions our region actively to our place markets full activity recently team to today, in fees local Capital our franchise. product including from area, customers swap needs accelerate. Carolina and on in banking across markets we have capital stand we adding larger income syndication has our reorganized, of a clients. In saw we increased international in specialists calling the

During from significantly. of income increasing from we the nothing a in fee capital as strategic into is key with swap year. we’re executed SBA good areas a and for number quarter, identified last XXXX, markets us first to the up start. off virtually This total region business the going transactions and the Both Carolinas were

our mortgage in Carolina and Carolina. wealth regions. In in increase consumer first wealth bank, Moving low, auto delivered non-interest X% grew strong income Approximately, average South strong compared was the linked-quarter, XX% very both to as banking, income X% typical of increased off and insurance and to brokerage quarter performed build the on, the each from and which consumer expanded half softer the management total income and the quarter contributions loans. the by well usually management led North results, Mortgage base quarter XX%, up footprint trust we indirect look their loans fourth and is a increased expectations. rebounding from us annualized, help prior to fee increased from achieve from benefiting

municipal On decreased seasonal business growth with offsetting the savings, deposit deposits and by time in expected slightly deposits average offset and side, in balances. total reductions –

We point given it environment. particularly have of remains the and gather us, ability a for deposits, emphasis to demonstrated

deposits, leverage deployment our set growth well will that our of clicks-to-brick strategy clients. generate products we confident our as are meaningful of We growth in to as full household our that continued offer consumer to can

redesign of launched commitment ongoing consumer is our which to our a unwavering our as evolving back, included by branches. more our responding progress. preferences strategy customer strategy than an delivery significant years and we’re Central as Looking banking adapt technology, to two in and consumer well channels we making to investments clicks-to-bricks banking ago,

the total our look X percentage mix has non-teller year, of percentage metric transactions, transaction we at For example, smart over non-teller of continued points The to shift last overall. online ATMs, to to customer transactions increasing with that mobile volume increased volume transaction when and platforms.

we’re and our addition, increased utilizing customer When adoption from clicks-to-brick In have in equipment positive added time the during pleased our several These looking overall year. asset-based to markets about at even capturing quarter customers technology, strategy. the our and the both significant units, with mobile begun that online trends have successful contribute evidence we’re fronts. last more. execution are lending number are of investments a finance and first accomplishments we relationships and quarter, Carolina of our on In for this optimistic the

new mentioned, gain I product each generating traction specialists by international quarter. which we during in banking, management and started As place to have the commercial for swaps, business treasury

a teams XXXX footprint. early we’re highlighted in We a already excited quarter new we’re encouraged believe quarter As good their deliver future wealth is of attractive for those strong Overall, established markets capitalizing growth. mortgage the and the for foundation had I earlier, pleased our and performance of accomplishments the first the strong the F.N.B. they’re demographics to management a on across beyond. quarter the and entire with and team about by this prospects results

comment quarter. to asset Now, I’ll the on Gary quality Gary? ask for

Gary Guerrieri

morning, and Vince, everyone. you, good Thank

first positive we our stable quarter slightly marked For a favorable across improving results finished credit the XXXX, by and of with position. continued to portfolio, metrics continued portfolio

flat points $XX.X XX improved results NPLs solid XX levels, basis linked-quarter a to with XX total at Net Our down at with at remained points. showed annualized, at X.XX%, nearly charge-offs while basis OREO points million. provision delinquency quarterly basis GAAP end March generally a were and

the portfolios. Let’s for the from each results key some our of quarter review now of

results. with points mark, showing which attributable reduced Contractual X.XX%. performance, points X at X.XX%. quarter. quarter million favorable improvement originated closing, but portfolio, basis XX to first acquired ending with the XX of ended which for the of at which March stable quarter at with with loan NPLs portfolio primarily basis while originated and were compared ending overall results coverage loan over due position now Shifting organic of prior Looking Inclusive growth first the remains over basis OREO reserve very year-end. further XX an book portfolio, year-over-year. reserve basis charge-offs of and driven to remains and the reduction, we’re with fourth provision at resulted to the level past lower combined million, covered non-accruals. largely the end which position the at points, for net reflects net first delinquency the covered due delinquencies we with represents our remain of $X.X showed quarters. million, end $XX reflecting quality basis all points originated portfolio period, generally point the XXXX in improvement flat XX an $XX.X contribute pleased at in past improvement position totaled of which category In a solid company’s quarter resolution OREO credit our $XXX of totaled line This lower robust year annualized the in slightly, the of linked-quarter loans. $XX prior for charge-offs million, and Credit to increased by the the acquired quarter, adequately The an points, the March to basis levels. XX The reserve quarter, to was activity an levels total billion continues continues Originated or a ending satisfactory for to

of strong and focused highly of key made to investments As to additions on continue systems enhance remain talent in active across professionals. and maintaining some and risk diversity to our place, a call further credit integrated ongoing credit we Chief robust our Calabrese, portfolio our our fully team we his philosophy experienced banking Financial portfolio culture core for I’ll institution, to our turn the with this management risk With being all Vince foundation appropriate now underwriting, consistent Officer, on remarks. over execute of strong segments.

Vincent Calabrese

first the color Today, Good some of rest Gary. everyone. the outlook brief discuss for quarter, financial results year. the will Thanks, for on morning, provide I our the

by payroll increase of income fourth As in loans, on share, recoveries benefit offset quarter $X.XX acquired the presentation, Slide X increase from the our beginning the was in you days and and year. partially in $X.XX the of level lower the of taxes the the having fee seasonal The a in operating lower per the year. increased impact $X.XX at quarter and can from see quarter, normal for first of quarter an a taxes last were effective on earnings excess fewer of

X% markets. and sheet X% the We Baltimore $XXX growth across was included net commercial Cleveland and Let’s growth for loan for the XX% Central and strong Washington loan average solid start loans. for or Linked-quarter Slide consumer annualized quarter commercial footprint, particularly Greater million, production X. the which with loans in balance the starting D.C. on annualized, of Pennsylvania, with growth had

On the acquired those X% contributing $XX basis, balances. and The by was to side, Page runoff the deposits had consumer a inflows million direct rebuild, residential loan coming can growth the to due on offset $XXX total declines mentioned On the release, quarter. spot up in of of quarter which as installment quarter, that growth to on see our and during line and we credit million, expected we as which on indirect annualized see Average the primarily accounts, in expect ended consumer X in you decreased our by for declines municipal normal auto, total basis. deposits strong an the months. seasonal the I earnings business reflecting January mortgage and entities in slowed the moderation overall total portfolio call

we growth you initiative part was of If accelerate in in deposits the recall latter successful. to households, and very XXXX, which launched an

were first we We smaller that to longer-term in some able rates lock in continued the environment. we find on current the that a scale in quarter, attractive where

accounting statement. accretion $XXX,XXX decreased Turning the recoveries fewer in scheduled earlier. of lower of Net a or mentioned and days income excess excess and declined decrease to due in a $X.X to level increase in Total recoveries. million the interest million slight quarter with X.X%, I having the income $X.X purchase $X.X million,

the impacted the if taxable adjustment, in on you some points In margin by adjust of net sheet. compares is now, accounting investors points X was I’ll comment to so the rate purchase XX the the for adjustment, the Also, the linked-quarter our basis. for changes right quarter, basis briefly points. margin of differently, and accounting basis of quarter. given which on margin flat the lower in FTE a interest focus terms balance Said I a impact, the purchase equivalent funding many FTE know cost X federal tax basis fully dynamics nearly the added in fourth first

a side, lift than half asset to most adjustable, more expect or is LIBOR. tied loan the On rising continue that but get to as we from the little rates variable prime one-month to portfolio of or of

our the look average at up release, basis points. yield press while If been rate accounting, volume in you at X table was flat loan the the purchase yield excluding have X.XX%, linked-quarter would reported

quarter of will Going borrowings, an as in referenced forward, loans earlier, the continue And the credits funding to long cost you loans the funds increased the the of increase. immediate impact type short-term X the higher-yielding given reprice, increase can move, of overall rates Fed as this see repricing as commercial C&I on side, the on in with and response basis well real see mix seasonal I will we and to acquired although points of those linked-quarter our a variable rate estate the being biggest driver for that rate in source and growth declines funding actions. deposits volume basis, the then

efforts and online and our through are channels. driving strategy pricing deposit household marketing on growth Our physical focused both

focus the specialists. product our to on with side, commercial management incent gathering, efforts to cross-sell we On continued bankers our treasury deposit

strong and components expense started increased from in look Wealth sales securities a markets income and three expanded management really increased Capital Linked-quarter, The our commissions and due higher income resulting X and combined trust or fees higher capital Let’s quarter to and at growth markets a footprint. non-interest strong at wealth international $X.X to activity, X%, Slides non-interest activity, included in on had now and of which swap income equity XX%. brokerage million, revenue income, all syndication businesses benefit X.X%. increased markets have X. growing banking.

was contributions the prior We’re revenue in which in results slower Insurance Total of start face that beyond. coming doubled of that our we same revenue and banking more optimistic level the categories. included XX%. the at on quarter increased relatively than strong seasonally was those quarter over also gain revenue first by we’ll even Mortgage continue million sale with the for being well for think $X.X revenue the higher SBA to of see posted typically million last business. as strong in the fee sale Overall, income in gain million, were strong year to $X.X quarter. on quarter the $X and pleased in the bodes XXXX

as employee normal the Occupancy quarter, increased items X. biggest New Slide merger-related million excluding the $X.X snow increased for a Year. and resetting The personnel Turning we due to the the of Expenses and linked-quarter in to talked cost when expense million, in last due $X.X utilities. million that in first increase taxes also equipment typical of to quarter, is expense quarter. the was about $X.X driver removal fourth the in increase

we January, related XX.X%, of lower be the year, rate, income a as given to the our days the our we we objectives to normal the in having last basis. one our of was increased growth year. be we’re ticked well-positioned increase in first adjustment in in to partly The and start in linked-quarter ratio growth the with flow the impact particularly team but the with deposit quarter quarter. a in up to year. and first from federal deposit efficiency Vince. The targets I’ll area, from to first on over where seasonal increase continue combined new FTE net to focused shares and turn discussed the we the back to able Overall, our fewer the quarter first linked-quarter tax XX.X% on for reach With XX.X% expenses The rest Lastly, seasonal year of due interest of reach of that, as improved tax performance $X.X will million throughout our was quarter, successful strategies. is call will think gathering turn that believe the Vince? the

Vincent Delie

want the momentum per quarter. growth reiterate deliver earnings early in pleased that is In to a I share first are the central our sustained focus summary, we established by to trajectory.

questions. commercial the the number as the We businesses. across up growth activity increased notably in C&I encouraged stand all We’re well the of our XXXX to finance, and as footprint open bank, Operator, of today well-positioned by strong opportunities equipment a for to call financial performance. deliver the let’s

Operator

Instructions] Please we’ll gentlemen, with session. your from Sandler our the question-and-answer Ladies [Operator first and today begin question at ahead O’Neil. time, comes this Frank go question. from And Schiraldi

Frank Schiraldi

Good morning.

Vincent Delie

Frank. morning, Good

Frank Schiraldi

the little if reversal terms you starting in you on a going what of pick you you here industry, costs wondering NIM as give you for quarter? deposit also color seeing can an could deposit with from Jut forward? get And the that just the additional just some focus if up and the get – net rate we’re idea NIM, in the growth seasonality obviously, there there, expectations can still given first more rising here benefit a hike of with the in think the

Vincent Calabrese

Thanks, Frank. a things. guess I Sure. few

looking Let things interest to comment keep in me income important of I’m when through just at that too, it. couple A kind interest you’re your questions, and fourth mind to I’ll to of of just kind on as I’ll first. get the walk for income going net through quarter. are net

is were for The million. So two down $X.X $X.X alone key quarter, drivers worth there we million. the days less

we’ve $XXX $X XX increasing basis XXX. the borrowings the borrowings Excess So very seasonal quarter. from that’s were gets recoveries, past, then result and to the lower in said resulted entire in decline which $X.X I as important strong And points fourth in a short-term mentioned, mind. lumpy, are million keep the to that up in billion million in in repriced short-term deposits then

those important three net-interest first. of So kind to affecting of income level are the things are fourth overall that

about, adjustment just it have as or the we math, all and math income in a As way there’s that talked FTE is the is basis again, margin itself, which dollars new it that. any we far net in of affect a But way. also doesn’t new calculating

I mean, reduced basis points. by nearly margin that X So

mean, of deposits already year, from see times in, So started year. back forward come happens every which go we I of couple first a the kind the to quarter, you as clearly

to second as first of go kind You the build see starts the in $XXX and seasonal year. outflows it you $XXX then million from it quarter million to back the in and through swings quarter

expect So And in full That March, we the quarter. the forward – then from it into movements benefit some lot then but you from the ability the clearly corresponding would that happen to gives as there. forward we second to benefit, gives move the and Fed second quarter of go benefit – you going and the is And the that of we and see going we be mix we’re in the second then to in increase. third the lot a going expect the side. function on that level do the of on with success to that putting books deposits. in And there’s loans activity quarter, have the funding a it deposit of of

there’s in, the to deposits positive of the coming definitely in in back a quarter. second moves So addition Fed the to bias influx

Frank Schiraldi

of expectation or current have rate on could you the -- a here given I a for environment? hike can’t in NIM given recall, past the on expectation expansion in for an just – your give it sort

Vincent Calabrese

last haven’t level which about. we year that know, a significantly commented – quarter we of the function fourth and guidance. happens, talked it’s I had we mix. acquired not from did Yes, on a of given really quarterly moderate we’ve such that that mean, runoff function portfolio I It’s the

basis it’s we’re mean, specific it. number Frank, I not putting up, on point but So a

Frank Schiraldi

is if is in with growth, then it was of is acquired obviously, quarter, it right-sized, And loan And the share – book wondered I the first accelerated? commercial just now still quite the Okay. there in us still you strong. bit a your year-over-year. in also, if pipeline could opinion, on runoff or the sort

Vincent Delie

your to question. the think, first answer I Well,

out. it��s Let We first. lot me transactions mentioned in stabilized. acquired as post-conversion. about sheet, We’ll first. were I derisking, a typically those believe we the we do, the answer We that? moved that balance runoff How we as the second about we question which assets of re-underwrite talk

has have significantly. made the portfolio, that So assets it but most will always of and we loans out on stabilized. There’s move to happen, want because out and that stabilized in has so been payments the curtailments, runoff there’s moved that always

of first with The piece growth, mean, we’re very the growth. I Board question your particularly growth, loan pleased loan to the C&I relative across

look you the you ask the If about pipeline, pipeline at year-over-year.

over grew North in sat year. $X.XX and million was first $XXX $X.XXX As of when it that Carolina quarter it last our $X.X the the we billion, so billion And of pipeline we pipeline number, X/XX, reported, at included up to billion. from

is most not the quarter. remember, Now the quarter robust first

in So build quarter quarter. that in second did pipeline in into to moving strong portfolios. have the evident has production this the growth We continued the

pull-through the there. out. pipeline was push back So, then gets And is it what resets the happens and

closely, larger. we next pipeline quarters. transactions So to The the is impact it need but the timing when closes examine two over overall is us of those should something

at As breakdown just the closed Obviously, North significantly pipeline, Carolina is transaction. you the look the last up of the had over we pipeline, year. the

is were last end-to-end. up consistent in we pipeline So with fairly million $XXX they where year-over-year quarter. were And about total that

pipeline and the grown of there performance has opportunities. very and in the we’re So terms originating with production pleased the

spot in portfolios look spot double-digit, Maryland growth. North on a particularly double-digit, you on and double-digit, a grew Carolina some single-digit, double-digit, portfolio your shed grew runoff Now Triad more basis, if grew basis, question, so Cleveland Piedmont grew the area growth. On upper pretty balance nearly light grew and at maybe Charlotte to the significant the relative Eastern

up an recently us, for we’ve double-digit. and Pennsylvania that’s is Reading solidly look Harrisburg, our capital other is acquisition, you capital completed the – where which If region, region which at area Lancaster

flat, The stabilization started expand, So, we there have Raleigh Board, was as slightly across growth portfolios Pittsburgh the negative. was mentioned. been a and has to loan the

our the perform very It strategy strategy markets repeatedly, multiple we and risk. said was from conducted those provide like as beginning this as was were acquisition in diversify two the the didn’t Pittsburgh. we well. to with But look opportunities to us the to grow that So that

sits. considerable other that we markets commercially. Pittsburgh just time, we’ve we we have and relative in a growth So share We’ve a today, share very over Pittsburgh. gained significant These had have entered, so share low

those to a time seeing. during ability growth our everyone So not you’re portfolios when is and what plays for grow out easy that’s

So with we’re quarter. pleased very the

We’re with accelerate from contributions gives to expect coming Carolinas as continue and the that very information. pleased the forward are move the through that we to you that we enough year. I hope

Frank Schiraldi

Yes, thanks you. for Thank color. all the

Vincent Delie

Okay, thanks.

Vincent Calabrese

Frank. Thanks,

Operator

comes next Our Jared from question. from go with Please Wells your Securities. question ahead Shaw Fargo

Jared Shaw

Hi, good morning.

Vincent Delie

Jared. morning, Good

Gary Guerrieri

morning, Good Jared.

Jared Shaw

North So the actually area. was more that from just the next last years, did that you’d momentum? coming we So, you about it said over following-up than to like Carolinas? the that in question, grow you expect the expect looks say And few XX% to you XX% on as from that pipeline had go Carolina see

Vincent Delie

greater XX%. Yes, actually, than it’s

it’s $XXX I like looking range. more the how of don’t you billion. the basically XX%. it’s guess, But in know I million So get XX% it’s $X.XX

about… So has it

Jared Shaw

Okay.

So they’re So million million? $XXX up about Speakers] [Multiple is the… $XXX

Vincent Delie

– $XXX same million the up last from No, up actually it’s year. it’s period

you you? portion significant of But quarter pipeline. if no, first quarter-to-quarter, first confuse I So sorry, it’s did a to our quarter, look

Jared Shaw

Great.

you were and Okay, right to with expect are sort in we from planned CRE CRE side, the see we tapering up, or pace at And the so do now? get here ramp sort you how And could out what are see of, thanks. the of looking growth of pay downs that where to rundown then comfortable you are of looked? looking separate

Vincent Delie

that Well, pipeline, $X.XX CRE about billion in X is – $XXX about of million. it’s

opportunities continue to So would is, the business, to effects the – growth, us, lead are in we we of with in. indicator I show expect tax segment, an and also I spectrum. utilization the small the in general, would so is C&I majority market, then middle full haulers good that’s line And pipeline of C&I that where good in which is flatbed the for the Transportation the expect given cycle that have prospects I Rust kicking indicator. Belt. in reform up, believe is busy, particularly a there, C&I

certain So pipeline. a at perspective, and of look from we’ve strategy opportunities. we’re Gary The the majority a C&I speak when the credit the of growth tightened seeing CRE on this, up of categories. but up we types of opportunities side kind can – we made pipeline in From is those to good our good standpoint,

certain we a We’ve or frothy shop. felt within in it CRE classes also So, spectrum. we’re the a more asset little was construction – a space finance of

So and to there the may in through finance we’re long-term but we piece, stub space. prolific a CRE mini-perm tend a not lender construction be

which about you’re some that coming talk are payoffs you you So don’t portfolios. impact there in those portfolio. saw But balances, the seeing it a bit of through why Gary, acquired the in little what

Gary Guerrieri

we’re Yes, there. good continued seeing activity

growth in last category softened, would expect, with As from significant as that later Vince mentioned, has surely over the five we are getting in the the years. four cycle a CRE or Multifamily standpoint. you

not that that So, a ago. you’re space while in quite a bit we’ve space. significant little deals continued in And seeing tightened

to the diverse opportunities CRE seeing across opportunities expect are We going forward. continue do space to see and

and continue standard. we to our asset So, us for exceptionally like that underwrite to it performed we well It’s class.

continue business we’ll do there. to So, good

Jared Shaw

then staffed And up fully sounds on compensation now. thanks. the like just it you’re Okay, cost,

should we pull So to here compensation items? some first back expect we see XQ of the from as quarter exclude

Vincent Calabrese

million recall, you X April making then go don’t payroll probably X, I million million effect would have I about increase merit the And our you also. were $X.X come changes merit you increases see Jared, into to is taxes we which starts $X second about for to to talked April we there. then down, quarter. the million to It normal think, versus But definitely January, from year, come X.X% normal wages, down. know may that $X $X the which minimum the

Vincent Delie

included the now So was it guidance. in

Vincent Calabrese

was in right. that all guidance, Yes, the

Jared Shaw

Great. Thanks very much.

Vincent Calabrese

will up salaries Payroll those will for be be taxes lower, items.

Jared Shaw

Great. you. Thank

Gary Guerrieri

Sure.

Operator

Haire from Please from Our your question. Jefferies. Casey question go with comes ahead next

Casey Haire

morning. Good Thanks.

Vincent Delie

Hey, Casey.

Casey Haire

to Wanted I’m $XXX the of touch so – quarter-to-quarter, down was doing so $XXX on right, the math, the million it book, runoff? acquired million if

Vincent Calabrese

the in was versus it Yes, quarter. $XXX million. million million first a $XXX $XXX over little

Casey Haire

Okay.

guide for a much trying So, production stabilized, understand, does is Vince, was was pretty the million runoff but soft the just stronger? is that that good, the below year, that the growth do you’re I’m in so is a $XXX acquired loan balance it your to originated seasonally know that of quarter growth guide? I loan your quarter saying assume and because

Vincent Delie

Yes.

Casey Haire

runoff, sounds it or of a from you’re originated on fighting step trying decent up? headwind that like, acquired taper just the sense to here get the I’m And a does can and

Vincent Delie

we our pay – in I I what down refer back I’ll guidance tell factors. you runoff mean, incorporate you the factors to guidance. and

you’re an getting So look. all-in

I So in that’s model. what would my use

Casey Haire

Okay.

Vincent Delie

– we upper what was loan standing single-digit we’re I’m growth. said, And which by

Casey Haire

is Fair the some I’m enough. was through assuming, the a the of other your pipeline – – overearning, SBA? What kind decent any on line, I runs a do or at million we result. XX.X within up how are $X there, starting Is think, was – have we Switching to there other nice that because obviously, SBA point, there some we there lumpiness line? fees, which that

Vincent Delie

pipeline think is solid. pretty I the Yes,

as their think will of good total able about we today. guidance in objectives. and be you is terms that to feeling group what pipeline achieve gave pretty healthy We’re we The sit in and I

staffed. fully We’re

or calling budgeted. officers XX have is seats, in what which planned had we the now We

So I good think, we’re spot a in there.

Vincent Calabrese

rates stock. run of there. are up federal we kind have current Yes, thing in home reserve on into dividends and is, income non-interest loan those other current pay reflecting and Casey, rates And the other

they and off, building number positions there SBA as So contribution a year. improved all main that expect as year. two from through we expect are I plus we number and that be the the the filled, mean, the go through sales we we build go items this to the to keep the

Casey Haire

you is The Okay, last to much one purchase great. for guidance But the me. to it’s guys on And like it sounds pretty – still bit predict. across the XX late, in came just accounting, where comfortable? But on years reaffirming Board. XX which know little a I are tricky the you’re

Vincent Calabrese

the not have we No, Yes. guidance. changed

kind of because expect quarter, year lays go points they – X, pretty people ago, kind X Last we quarter, were this had helpful, basis The stable. last it’s talked this the the that increasing really as forward, we’ve a were basis stable X X. So, Page X and mean, a chance points you as The – and out. accretion quarter, to at recoveries we cash to normal this about I haven’t Slide look know, of but number X quarter. it quarter, it

this it’s a lumpy – as is on mean, quarter number I So, through the you year. little bit the go that lower-end.

be opportunity So there’s there may – there. some

– we So the in is still had about to the that given but full-year. guidance XX the for January XX the –

Casey Haire

good. you. Very Thank

Vincent Delie

you. Okay. Thank

Gary Guerrieri

Casey. Thanks

Operator

Michael from ahead Please comes SunTrust. question question. from next your go Young with Our

Michael Young

the the of wanted a start your of clicks-to-bricks Vince, of, to of implementation and with strategy on of two anniversary there, Hey, comments lot that. detail kind years you provide

have see if wanted you Just – distribution now more come in confidence anything or sort if incremental to there’s color there? of to any rationalization omni-channel opportunity cost any the additional

Vincent Delie

that’s mean, I great Yes, question. a

I online think through We upgrades, the as platform those prepared focus we from. total. of processing volumes. ago in new efficiencies which on our clients over which happened, We year rolled number a constantly a out transaction continue gain comments, we mobile I a review channels, my in efficiency mentioned up, little We to we that picked as and gain

we’ve called our Ready look look delivery our that of talked and of performance have number delivery locations. about of and numbers measure channel program at we years. We performance over we – numbers served the at financial And at transactions customer physical a – a channel

consider us kind best what So product But the our benefit. great S&P with we prune in think, provides opportunities number And an on physical had which the astute now applications of I highly-rated fulfilling the we’ve think attributes that to I it’s that a of I to strategy. is to a or on of have, have study be channel, relative delivery well the part study. Global that, one the mobile we performed of observation,

we’re utilization part clicks-to-bricks. leads offering way, behaviors other part our need sure base on that fit that of behaviors customer the our on of looking that’s strategy The at the automated an and the analysis based in customer products of certain to for making drive is salespeople,

redesigning it actually Another piece branch. of is the

kiosks roll about and entire the in It or branches the consultative so been where in and for rate have website a branches. products final is to included of nature. content the branch, development sometime reflected changed that in on which it’s enable have then the is out been in We a And engage format the we’ve more our in piece dozen our digital customers prototype of run the has base of so of the for redesign activities our deployed, expense it, of to number site.

choose clicks-to-bricks. experience products That streamline So to onboard content whole to on video we’re on be clients. view and a able products, application working is they’ll

improvements mobile So the delivery applications for the improvement it’s onboarding improvements to channel, to the of and a process online and to clients. combination physical

also So revenue. only we future, better generate efficiency the expected not produce but help in us to

Michael Young

strategic be back And had that longer-term really more scaling some objectives the existing then kind expense rationalization, XX% it addition getting to to your of Carolinas? do ratio. driven see below Is of the efficiency up franchise or it additional Okay. now you’ve with the you just guess, going going I by larger

Vincent Delie

I a combination I mean, of both. constantly it’s our think – I we base. expense review

going to done expenses. significantly which have we I distorts capital then will historically revenue mean, company little mean, add items the And – success and I here, stock are drive tax ability This the and generation. tax initiatives some perpetually confusing it’s I our we to company. a reform our our propose, scale think wage and good to Pennsylvania about a also job that as increases about in we CRE. way where years metal to the I change would back the metal of that we’re the to doesn’t and greater a in grow be generate pulling ago mean, sheet, which prudent how wanted be are it we risk the if cycle. be in wouldn’t talking put balance there, expanding given we don’t was think would We today – profile to revenue the pedal it’s But up managing the has are forward. than I view. We three expenses. meaningful a there is with move down we much

expense that’s all of consideration. time and company. FTE have generation revenue at ability over ratio taken into revenue upon combination I increasing reduce the to we per saves that an But has efficiency a the and based So be – to believe

Michael Young

the were be full-year helpful to one. the last just if come in well a we outlook? well, on as little color. at light, that doing assume would that That’s And low-end just has might guidance But one the something side. expense change of shifted that or Thanks. I guide, would I that so sneak revenue if the pretty on far could we’re And

Vincent Calabrese

– expenses but of some of variable, I nature. of mean, most the are in fixed kind were the them

there’s So not a one-for-one.

to we’ve really But I don’t if which not the we on about the side. have talked revenue take to actions you to off that – expect past, in expect think, we have… we would what happen contemplate, cliff, that’s the then that really fell something because expense we

Vincent Delie

to think, expense be we I constantly Yes, at initiative. fair, look

Vincent Calabrese

Yes.

Vincent Delie

don’t income not I fee loan I’m action. proven So into, have it what to we that expanded growth us. anybody time, we traction that want time growth, markets if over only very in. take we time presented but again. alarm We’ve in given And confident translates we good and for that the

will judiciously. that we that confident we’re growth that and continue very expenses going I’m manage forecasted revenue have we the to to So deliver

Vincent Calabrese

[Multiple nothing revenues. things shares the to Yes, tax Speakers] do with like has

Vincent Delie

an State Yes, we’ve had increase in year’s tax. Pennsylvania

Gary Guerrieri

Right.

Vincent Delie

money grab. a It’s

Michael Young

for understand color. Thanks I the Thanks. that. Sure. all

Vincent Delie

Thanks.

Operator

comes your Our from William Raymond from James. Please next Wallace question. question with go ahead

William Wallace

guys. morning, Good Thanks.

Vincent Delie

Will. morning, Good

Vincent Calabrese

Hey, Will.

William Wallace

prepared in profitable at business, you million. Are first the $X.X first quarter mentioned the on the is, question remarks the over SBA million? you My time $X.X million $X in

Vincent Delie

Yes.

William Wallace

Thank profitable. you. Segment

Vincent Delie

Yes.

William Wallace

appreciate That’s I all had. I it.

Vincent Delie

you. thank Yes,

Vincent Calabrese

Thanks, Will.

Vincent Delie

Yep.

Operator

our next go your Please with comes Russell D.A. Gunther question from ahead And question. from Davidson.

Russell Gunther

Hey, good morning, guys.

Vincent Delie

Russell. Good morning,

Russell Gunther

a items. of fee on follow-up A couple

wondered guys line, the And be you is you able origination margin you’ll do headwinds. for outrun, forward. penetration of both to that flagged allow that guys you’re industry deeper sort offset Yadkin on I you if to kind banking think how headwinds? First the us would mortgage going and able of that’s to something

Vincent Delie

retail Yes, a relatively expanded into we mentioned. that I significantly our We’ve similar strategy to mortgage where the high the commercial markets, share. have strategy bank deposit

But Pennsylvania. quarter the XX% gaining of share been where And are past least, we’ve number we’ve tremendously, mortgage and the at are. indicate gained in North there in studies contributes those Carolina now, particularly that about So we total. think I to across markets

our will us. the is mortgage have money So, new very should out there year to tell which of we do, there percentage well geographically. markets in forms what this origination, actually last I a in in the we’re – helping on that for mortgages, of other markets pressure a is our and better a in because achieved that we North position, bode But focus are would which it’s competitive. Carolina expansion first in produces and higher-margin the coupled say, should than I on is high quarter new of I space, our company. purchase with pretty achieving margin And what we think, year are so you, with continue the pressures diverse that building

Russell Gunther

Okay, then I… great. And

Vincent Delie

Does that helpful?

Russell Gunther

anticipated seasonality. on just was service even down a thought I charges despite well. than Thank a as more helpful. had That you. it’s the I little number follow-up Yes,

is internally Carolina done wondering, footprint-related? have guys some or Just a you that change anything in customer may behavior retooling

Vincent Calabrese

It’s managing And there, that of Russell, kind to we else their you No, there’s are seasonality nothing money their than watching normal they unusual so as just more people activity normal know, probably effectively fees. just people that past, see. the was in out. are point have would

other So that – but activity. than normal nothing that there we’ve changed

Russell Gunther

Okay, one on great. me securities then last the And for portfolio.

past You portfolio Yadkin had bit. the mentioned delevering guys in the maybe a

size your assets, general here, of to forward as of please? maybe as curious Just thoughts about think around percentage some the stick going of kind to just comments, it portfolio a on grow, earning

Vincent Calabrese

on after delevering to going Yes. conversion. say early we the we do kind the I that did would right were No, of

that we’re size assets it, right the of little I we at XX% in now. there – looking XX%, run to investments on So where of over think, were XX% some I I little which manage additional mean, of a cash total treasury we’re XX%, our a moved put of pre-invest kind it’s every to team that kind opportunities some because month. flows books found, of the of bit north that rates the mean, haven’t

is normal So for putting a that range us. XX% range kind to operating of XX%

Russell Gunther

Thanks, Great. guys.

Vincent Delie

Thanks. Russell. you, Thank

Operator

ahead go partners. Brian question with question. Please next from your from FIG our comes Martin And

Brian Martin

Hey, guys.

Vincent Delie

Brian. morning, Good

Gary Guerrieri

Good morning, Brian.

Vincent Calabrese

Hi, Brian.

Brian Martin

kind can and on talk of about general just quarter. the you were But on bit kind little was there? doing of there you The what of how initiatives it was guys little portfolio consumer bit balance front just less a that a maybe where year you guys side of loans just So thinking consumer looked up. about in the kind I anything total wondering, the the and going nice commercials just are this and you’re the just

Vincent Calabrese

say, I’d consumer. Yes,

weren’t installment, most direct If home the we equity and terms you look of at in competitive pricing. provider

bit. hold line pricing, volumes So little brought a on the the which to we’re down trying

the there, grow. strain. I think that opportunities mean, to particularly to there’s opportunity are given like I isn’t seems continue it segment consumer that experiencing there

bit I you may think, have a seen a of little pullback.

and We’re little thinking home the a on means maybe for the changes because borrowers. law about that confusion equity side tax of what

not has – drive been strategies our forth those we’ve to it growth coming. yet put that’s So segments not in

from being we it, so you are things reports we’ve – settle out. that provided becoming private typically don’t be the And little are still on anything growth are that that comment a you’re I’ll mortgage to we I know, know some the in want then a if Gary, seeing let standpoint, portfolio. It auto there. directly Gary, to jumbo the comment in on originations, our think had but sheet continue good banking indirect production coming indirect that that, So in That’s the him to I And production clients. aggressive to I as space loans space. direct the items also balance there. on are to else. mortgage selective more

Gary Guerrieri

volume. our Yes, with that a flow with relationships footprint. That tenured network continue work long regarding continues of be the our indirect steady across Pennsylvania to we our space, to dealer

end we basis rolling quarter was the XX perspective. The I’ve mentioned run basis that underwriting mean, the the XX from is at and there. it Delinquency past, to I a book credit As at of the consistent charge-offs points. points very in XX-month group in

a it’s So there. us. very opportunities And continued business book we see can – of we for high-performing

QX typically the a thing seasonality with year, home you where quarter standpoint. production other the lot have first have business, a in early from a equity of The is you in the softer little

have some So as of Brian. well, you into coming that play

Brian Martin

just a Thanks. a back And your maybe minute just on one can talk the see Gary. you’ve of lower. little just to a Okay. some maybe or then sounds the the to come That’s going of little come bit got about bit deposit and another strategy of – pricing kind see two opportunity for maybe you just margin – kind deposits back that borrowings like an and helpful, in

think about that on, the rate as it like about margin that, maybe from we two? – the quarter? like you and fair, general, you’ll you loan kind the the So as bit feel year the it thinking increase just another then or Is seem at least, guess, sounds I seems about you and mean, like cost have side And rates. that of next ability core the bias, – of loan I think balance just pressure rising funding an the has the a I on with of upward benefit it’s your to outlook outrun maybe think, in

Vincent Calabrese

book. level, seeing we’re you already expect deposits that see rate on to at second movement loan first, deposit the as a of quarter, at the comfortable loans ratio well it’s as improve quarter and kind the to flows, first more as the of if I of influx earlier, I at of think, normal look mentioned the funding kind overall would regarding the kind position, in

increase on As funds offset point was moving. the cost points excluding was we in of overall look basis by and purchase side that borrowings with mentioned, X yield, the you up loan basis X the accounting kind the at if of

as to think, the your you to growth in, with benefit – as forward back the the I loan and benefit So Fed that that of more move. the coming of you’ll with get that loan the see go I growth with of funding relationship and well coming more see deposits think, point through, deposits – helps you’ll as the

retail masked in to We’ve mean, been drivers on in net we’ve as bucket XX the balances on of checking checking seasonal the out other and combined last growth side had and deposits. side. of and on of of far seeing the XX one As growth checking XX. that in XX but out on gets the the had net the But net side, account growth XX-month the growth week, time I the flows savings savings account through deposit we’ve every kind XX of some with growth weeks by commercial XX

ability generated since and obviously both then particularly since So I billion growth, fall. adds of to week July, net important account almost them the we’ve in adds are had growth last growth products. net offer every we And other CD $X checking the mean, then those and customers

for some have on XX-month the to We attractive rates XX that traction some would create us. good

betas, So the for the the deposit be different as so happening first then, many I betas. you move, mean, XX% the of looking And on that there would But are that’s are quarter interest-bearing far things the – if – are Fed deposit people would be as ways kind of kind the XX%. look at beta side. total at our of

that, been that’s manageable. think so far I So

interest think, model rate way XX% we we risk do. analysis more it, that model we in I than the total deposits

put act manage. be the pressure more if but I activity of And So, it’s going up, think, loan just a to it’ll ramps that’s I deposits, for balancing the to banks. our think on all job

Brian Martin

All right.

Baltimore on you talked of And North remarks, your of the Pennsylvania the and areas of kind helpful. and side commentary Carolina. is text the kind lot that Cleveland, just about commercial comment, one prepared without Okay, of pretty in the strong origination activity color a the on being in just release

the activity offer in it? it’s pretty good Am those you that sounds rates just growth can understand said kind for misreading stronger? to as of the on I markets just It the Carolina? in activity you’re But earlier you And of North is in suggesting well? color trying some Just origination markets? any are seeing something you those like growth guys just

Vincent Delie

the markets or either near double-digit double-digit four have of three Yes, growth.

So…

Brian Martin

Okay.

Vincent Delie

spot I base. mentioned that earlier

Brian Martin

Yes.

Vincent Delie

well. they So perform

been region, to begun Maryland now Cleveland, is generally, Lancaster the a meaningfully. contribute performing Reading capital have Just at have and high-level, Harrisburg, which and

So…

Brian Martin

Okay.

Vincent Delie

points. …those are positive

Brian Martin

it. got I Yes.

that one makes Anything or Raleigh. it maybe wasn’t anomaly then you it some the more talked the that And performing are was think to time about that – of tied just your I on too? Okay. Raleigh you part, just

Vincent Delie

there So as I truthful, a move think, perspective from be to particularly you there’s less market. up C&I opportunity

or That but doesn’t moved of great market. around – think, other good North the we’ll for it’s there’s on I mean, more out, market, moving it out. opportunity a have see believe movement our a it’s ABL markets not, Carolina, a think, I portfolio we’ll moved not lot us. in small things And part business

So, the staffed just a having were and stabilization of people there the the portfolio in now. fully seats

growth as much some my us in better there well. is I start should we a market. So for to estimation, think, see Charlotte, But

Brian Martin

Okay. right. All

I color. think I had, much. appreciate so that’s yes, that’s the I guys. – Thanks all

Gary Guerrieri

Okay. Thank you.

Vincent Delie

Thanks, Brian.

Vincent Delie

Bye.

Operator

and… Ladies

Vincent Delie

ahead. Go

Operator

call remarks. Ladies I’d end of over at the and question-and-answer conference this management closing to today’s session. gentlemen, turn time, back any to we’ve the like for reached

Vincent Delie

the very Yes, I questions. everybody. you, great time thank the really questions, appreciate and detailed

optimistic sit. we where We’re very, about very

good typically was There good low despite growth We’re seasonal base. very it first a quarter, pleased us. with it’s point being the a for

So our delivered very first We a objectives. good strategic XXXX we progress relative to made solid quarter.

a progress forward So looking throughout built our we’ve great we’re you on and foundation updating the year. to

today’s your interest So call, and in thank you participating everybody, in for continued F.N.B. for you, thank

Operator

you we’ll that, for do with conclude gentlemen, and conference today’s Ladies We call. attending. thank

You may your now disconnect lines.

F.N.B. (FNB) 24 Apr 182018 Q1 Earnings call transcript