F.N.B. (FNB) 22 Jan 192018 Q4 Earnings call transcript

Company Profile

Participants

Matthew Lazzaro	Investor Relations
Vincent Delie	Chairman, President and Chief Executive Officer
Vincent Calabrese	Chief Financial Officer
Gary Guerrieri	Chief Credit Officer
Frank Schiraldi	Sandler O'Neill & Partners
Casey Haire	Jefferies
Jared Shaw	Wells Fargo
Michael Young	SunTrust
Russell Gunther	D.A. Davidson
Collyn Gilbert	KBW
William Wallace	Raymond James
Brian Martin	FIG Partners

Call transcript

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Operator

Welcome to the F.N.B. Corporation's Fourth Quarter 2018 Quarterly Earnings 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 note today's event is being recorded. to Investor conference Relations. like Lazzaro, to now of Manager would turn over the Matt I Mr. Lazzaro?

Matthew Lazzaro

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

Vincent Delie

earnings welcome Good our to call. morning, and

asset up I'll year's highlights, our Vince review discussion open last our We'll objectives financial accomplishments Joining will Chief up for Officer; our strategic Officer. and a and me Financial XXXX. review and then Gary will Chief discuss our Calabrese, Today, Credit XXXX touch about wrap Vince financials. call the questions. are Guerrieri, with for Gary the on this morning quality,

some to key metrics. performance like I'd highlight First, XXXX

a which achieved fourth strong share our XX% We and earnings significant milestones earnings revenue per year, are very this quarter pleased operating with included team increased finish $X.XX. the record to as

of $X.XX operating per profitability year generation, $XXX share value increasing net full strong to million. earnings ratios the income increased by XX% in capital XX%. share book higher resulted and operating capital For internal levels XXXX, per tangible driving was a These record and

via and For payout the our levels year decreased note, we for income XX% billion dividends. below $XXX dividend in I'll this XX% fourth full which ratio to shareholders noninterest record quarter in and ratio XX% returning grew XXXX $X.X XX%. FNB total these capital million growth reached while growth to the of of income directly interest net by to revenue X%. our reported driven finished

management South the and revenues growth of average increased in penetrate success resulting expand of Our in begins fees XX%. new attributable income capital portfolios ratio these Double-digit a X% in market markets loan increased of North Carolina offering markets. to was deposit banking XX%. product by mortgage to base continued as and deposit Noninterest year-end in increased our largely with were and to growth XX%, customer of X% our growth to loan of and attractive driven respectively, income XX% increases wealth

on Looking leverage. and we operating management critically at positive expense are driving expenses, focused

more detail continued Vince expense XXXX. be on when guidance Our will focus evident for reduction provides our in

and credit comment year, and declining XXXX ask linked of quarters As on marks two initiatives quarter ratio Gary expectations. expenses a the slightly which full-year taken commentary this rate expenses. basis a result on Calabrese our of will quality provide XX.X% to Vince lower efficiency I'll on were cost-saving run was now consecutive

Gary Guerrieri

we quarter continuing key positioned flat of XXXX quarter basis multiyear quarter which X.XX% which year move XX points were XX reserve but the on reached prior Total over GAAP had point trend basis walk XX and charge-offs points. and basis OREO We to XX basis X points. well year On improvement the a results marked the was This portfolios. into and Vince ended well metrics showed slight additional at has let's annualized credit originated down XXXX. at new will acquired more have lows. representing you for as with a a delinquency many Thank the everyone. net to bps fourth by position good improvement to a quarter. as I favorably, touch results our linked remaining morning first basis our color, solid portfolio full through our provide NPLs

ended consistent XX basis delinquency with and or points. annualized points charge-offs originated points nonperforming during XX basis directionally to basis net basis in prior at ending a $XX.X on portfolio, Originated over million. quarter. the XX solid basis very numerous at favorably with reserve of OREO points, reflecting an portfolio first of moved representing Looking quarter performance successful came following basis the $XX.X basis the also XX remained position points provision points credits. the of December million at the improvement a a quarter December originated XX of of at XX end at the linked decrease NPLs resolution The

were of end ended quarter totaled the portfolio our full of metrics next covered fourth credit favorably as year quarter. to $XX $X.X million trend originated billion in decreased continues portfolio totaling quality well in it XXXX, the to on we year delinquency up a acquired reserve was direction. have combined stand X.XX%. Inclusive the coverage and a and linked $XXX adequately in million at remains which the to at positioned. trended reflecting at loan line total mark, for ending GAAP The quarter credit acquired Turning with our quarter end Contractual positive the of portfolio the both back position $X.X results credit million. year Reflecting the

for it the points points of basis same improved delinquency year-over-year results, level while XX improved the to GAAP OREO and period. relates As X by NPLs the basis

XX full basis Our net charge-offs XXXX year were points.

the versus XX sale during the basis one-time Finance impacted solid So have impact, Absent resulting points points recall basis for ended a of third charge-offs at Regency prior by the year. accounting XXXX XX our quarter. would the if you were

XXXX, we remain business consistently credit profile. our objectives support to With core to throughout and growth position of management we continue in through risk. principles continue to in organization our our the higher growth the drive we delivery credit out of selective quality to which desired allow ahead diverse and to committed managing our very to Looking us that be high will markets balance seeking risk with credit opportunities

help of move cycle into the government portfolio the are large off monitoring carefully these economy. shutdown. sectors position positive we a adversely risk to We years results, including last by the the of have the could as Despite softness action taken later for also take impacted tariffs any couple over that which aggressive at be will signs table or we economy better

from banking management product credits, approach selectivity across day markets. disciplined our of on portfolio and consistent our takes focus Our underwriting, to are credit our proactive the and the each results teams every risk diversification of year sound and

developed We remain as will ahead. move steadfast the manage have and approach we strategies to in business the this we

quarter our we turn Financial Chief beyond. today, corporate his the expect C&I As we large first call and now stand number Officer, over which remarks. we I for in of quality the here seeing are to opportunities with will Vince and drive Calabrese, the growth pleased are we to

Vincent Calabrese

financial and good high for guidance and discuss everyone. morning Gary Today I will results provide level our Thanks XXXX.

see can $X.XX we the out X, on note. fourth on as quarter you a totaled Slide As finished EPS positive year

most us share value level points XXX, provides ratio TCE on earnings TCE our which Our book and with flexibility quarter recent per at expect now XXX our ratio from in grow this and would increased continue meaningfully the a to payout growth XX% With momentum we XX to to moving forward. basis tangible build under ratio.

at average from million The On sale. for linked of by on mortgage balance loan look quarter the growth in the Regency X% let's $XX consumer XX% X%. commercial $XXX including quarter Slide auto starting was direct growth loan loan up Now of annualized installment basis and loans growth and a up quarter or impact X% indirect the the partially growth sheet of X. XX% in concentrated million offset for about consumer residential totaled

we were was offset in activity partially origination portfolio as For the good balances. commercial annualized XX% decline CRE C&I our It up footprint. and a by across leasing saw

and to linked book increase average growth total the We quarter. bearing multiple deposit time longer increased risk we deposits, in the our interest during repricing average continuing in focused the highly bearing deposits, borrowings note these deposits margin helped annualized bearing increased quarter a included that X% a cost for grow are basis, neutral. interest consecutive X% including on in and the third rate customer experienced balances. or Turning X% quarter X% growth deposits. deposits to fairly interest categories in $XXX transaction longer-term of in funding increased and quarter noninterest I'll of funds on and million that bearing Noninterest annualized liabilities keep duration growth on annualized

Regency. Slide two the net having at months third income statement of reflecting $X.X Looking interest net X, income X.X% the quarter income decreased on million dollars interest or from

total accretion to XXX resulting accretion with interest million cash For adjusted items. accounting million in $X.X compares margin XXX the net purchase recoveries that excluding an accounting of from $XXX,XXX quarter $X.X and from was purchase incremental these

from as duration quarter, net the the funding residential offset adjusted one well Fed for time LIBOR. deposits and borrowings, the month of benefit at prior and growth, impact lengthening to the indirect margin increased the compared prime trend higher Looking to costs loans moves interest recent and tied as on and

the income gain sale decrease noninterest Let's from third expense quarter. X look by the and X. now the driven reported in million at noninterest on $X.X Slides Regency The income in largely was and

decline of million income sale normal of sale. management reflecting the Capital this lower million lower was $X.X volume to produce fee prior million income Regency and seasonally gain, fee Mortgage markets the or wealth to decreased insurance with margins and during $X.X million $X.X noninterest quarter. impacts quarter. gain income dollars and income on contributions banking primarily attributable was continue consistent strong the to most $X.X This lower due seasonal X.X%. sold which Excluding decreased

and $X quarter and to third efficiency the normal in for consecutive level solid X Slide operating partially of elevated accruals in million outside quarter million the consistent to of quarter. salaries $X.X two quarter and was were fourth medical reflecting decreased XX.X expense. services expenses. million decrease fourth decrease through-ups declined insurance incentive in a insurance ratio of The with at Turning marking by expenses FDIC primary employee XX.X quarters expense The decrease last $X.X offset compared benefits drivers $X.X increase million

lower shown Next growth to full level in grow of our Slide I'll the single-digits. income focusing that position I increase sheet managed Spot risk expected are we a expected expectations interest Regency and the to net spot balance Net income consolidations year $XX loan to compared organic mid-to $XX for compared accounting to though in is single range XXXX. and the a deposits we purchase low million noninterest on increase XX. will branch expected minuses million sale, XXXX and the are the in low full-year high on driving in growth. XXXX the to deposit to income full pluses discuss loans with which interest year includes had digits interest XXXX. to single Even note neutral and to rate and is digits for

to high insurance year management, full originated to of the expense are be trends. XXXX as range down businesses is to is to we $XX million and $XX our find expected Noninterest grow charge-offs to or fee compared expense out take expected core Our continue to base. low of of with flat XXXX recent expense consistent double digits net in Provision levels. mortgage X% with planned markets, capital to opportunities to wealth banking be single-digits million costs

through expected loan Finally, to total XX% of market XXXX to commercial we to production increased tax combination and expect gains our achieving share in range. demand footprint, up consumer rate effective our a targets. believe our is we across be growth loan and which In driving the lead pick will

solid progress made our strategy. deposit gathering we've side deposit the with On

I'm those we reach can So targets. also optimistic

our of XXXX growth Vince and initiatives. cover will some Next, strategies some about talk

Vincent Delie

group includes was several with I markets and to leasing initiatives our FNB's This average towards leases progress totaled last Thanks year. the strong and XXXX. we compared region outstanding Washington portfolio production the by region. led which those over these and with Vince. an C&I and provide had markets up activity very the earnings commercial Cleveland commercial On the XXXX. portfolio, during growth in XXXX to Baltimore XX% We laid last mid-Atlantic the our entered major year Combined DC out another In January's objectives. XX% call commercial update average want on banking

We we are within really on these the to beginning markets. as our newer to build see this capitalize significant We investments. southeastern opportunities look on contributions from success

four Carolinas, our met out of terms two the commercial the expectations For of year. activity regions commercial this origination in

- success capturing forward. had demographics and balances we've to lead moving year-over-year, with deposit will share that opportunities growth in FDIC believe X% Given the accelerated fuel commercial we Carolina deposit up attractive FTC lending portfolio

During strides improving the the experience towards year we made in consumer bank. customer the great notably

Global FNB's proof making XXXX Market study most we features and an This the offered again Intelligence of mobile is competitors. FNB with robust in more investments are example with XXXX the point those Clicks-to-Bricks. S&P As in a recognition with revealing of regional are by recognized FNB's apps than national and technology the progress

evolving and customer our to continually physical adapt to is improve in digital and Our preferences. our locations strategy response

refining Zelle and our physical new adding to platform. overall additional for experience and branches branch concept mobile also the network upgraded we consumer include while XXXX other During our features by to capabilities optimizing the digital our further

necessary out the have support analytics also We built our the of intelligence expand and use to efforts. artificial to infrastructure marketing data

delivery our and reductions. FNB average we consecutive increased branch per to average to reposition where nearly $X end additional attractive Through exceeded the million expense I'm our able results. December network with channel, of particularly XX as at growth we as banking we accelerate growth proud locations program well team positive loan. second higher million can deposit growth the achieved and FNB achieve Regarding our the our novo in accomplishments closing Deposits that of year continue deposit will branch $XX as ongoing annual XXXX marks in to consolidate through de retail X% branches repositioning improve growth. their consumer markets optimization were profitability. locations long-term while to physical

we significant mortgage updated both serve which response are These billion ongoing includes to improve in new we and as loan will behavior. growth investments guidance. XXXX. and keep already to mortgage organic on in changing reflected better to with features XXXX, technology our consumer in platform Our our results recent average investments encouraged drive the our needs forward profitability $X consumer production look We strategy to of enhancements online are indirect production across banking in these and and Overall in the residential business financial customers our accelerate indirect expense experienced progress. record to will providing you all exceeded

mortgage business, banking year. Specifically as increased over it last fee relates income to the mortgage XX%

are newer optimistic that we on We build this by growth can leveraging our markets.

driver mortgage our the in expect support We to business to be a meaningful growth XXXX. objectives

income, our noninterest last discussed I expansion to capital the Turning and year SBA of platform. markets

strategy SBA the for we did at expected who hired the levels our a leader business lower execute will beginning new perform better up the we year, not desired While XXXX. recently of risk in to this

in Carolinas earlier, mentioned compared revenue. million more XX% capital XXXX contribution with increased I As $X than markets nearly the to increasing

units we've just long-term to in a part few as to what built We fee business the on meaningful initiatives build core believe laid These and also leverage our of XXXX. out major designed to to businesses like meet in of these tremendous strategic we've plan profile. hope Western growth work. have our fully potential voted success consecutive a our our growth and to maintain FNB year employees risk possible consecutive who best to thank place effort fourth make through objectives in Northeast and our for our and Pennsylvania the year Ohio eighth I'd are

a as for finalist Baltimore. year listed was FNB addition, In consecutive second the in

better ahead, our Looking greater capital X.XX% begin year X% management we ratio targeted flexibility. positioned with strengthened position to meaningfully the capital our as TCE during reaching XXXX surpassed

listening fellow creating and future colleagues to our call the the I'll and needs shareholder better ultimately over turn greater incremental that, our We With value. constituencies questions. communities, for focused their are customers, delivering to value to operator by serve highly for

Operator

Schiraldi [Operator this morning's Partners. you. Frank question Instructions] thank And Sandler & first Yes from comes O'Neill with

Frank Schiraldi

morning. Good

Vincent Delie

Good morning, Frank.

Frank Schiraldi

single XXXX I step just the know if little the demand little cautious runoff in had I expectations, drivers is think Carolinas it – little talk wondered expectations, is a could others more or loan reflects more are and growth kind a you you you then give up, so that bit picking on if a primary getting growth mid-to-high seems slowing? about growth up some of are getting guys it it like little – a a the digit

Vincent Delie

range. global we've entered. shutdown, to government color me economy. all Well, the give having uncertainty the but with would execute Frank and markets giving the use X% you you FNB of new first that, lot ability But of said let a I around a tariffs, a because X% little good range very, to tenderness our I then we're and not very there's feel about with

We said we a more we’re to shakeout us risk the takes usually in it across to decent other of that in pick DC, we've with are production appetite. line growth North have to opportunities years - We're Washington change the And four As the couple Carolina personnel to up from very over, pursue the a the footprint. start selectively. pipelines. regions in we're standpoint. here. two good two feel past staffed expecting good fully our of from getting credits had to undesirable performance in I We're there, They

changing downturns two we've lower with part the moving We deposit is of risk those the share market are markets economic portfolios. and more Maryland of at to us our covers and in MSAs well. solid times. have the into without we've stressful performing achieved to enable share to the repeatedly We've and strategy Those think and we've loan mentioned these company very great good proportional in company. withstand I've the faster I that rates multiple assembled profile grow Cleveland growth DC team that that market. that share reasons a are double-digit there in gained in those built

we've I good of X% X% do have commercial We having in putting as we we've large - that the comments, some focus the company up reasonable. here to have that think company. income mentioned drive we some to and a his as started growth number and both said So fee is we high-quality grown for solid opportunities all will opportunities up of really market have solid Gary loan

a the so That climate, environment portfolio. headwind global sounds the and that derisking do opportunities. good everybody think you from our been the the so uncertainty everybody to has - us good. I that's thing caution will spent our We've perspective, I over economic quality good. I about pieces know and given that's cycle but lot been it growth the time for a there. given seeing We've again. change it do We're far So time, a could like mentioned are reasonable guidance economic to of out in where we a that's for is but Credit

our in itself despite So portfolio move I what a very think us. faces as position is forward strong we

Frank Schiraldi

all that about, for Okay, increase talked noninterest color. great And or talked just some what just bearing sounded Vince of is Calabrese quarter the then drivers that think interest you that on cost deposit and thanks not and the you indicative the of as it – is the beta lastly just or given like here. increase going forward in there about run rate

I have what's into near-term beta what expectation So have, baked in good you you just and wondering for model? a or your guess what the

Vincent Delie

company. to point noninterest strategy accounts has to Vince bearing we at betas, historical shift our been I'll there, before for Yes, deposits grow the the perspective to mix but always go some on

pricing think over double-digit are which average some consecutive of low past this quarters. period the do we've And from bearing including is driving we I back in this on quarter three we quarter, levels of is reporting shown higher noninterest balance quarters growth you perspective look a towards us, for a geared everything if So typically deposits.

continue we categories a are deposit can think our We're I to bearing households to have new noninterest but think pursue the great to game is working. growth intense, be certain and So competitively channel. in balances we I The in. going strategies in that competition delivery so bring price

We have good products.

manage our sales and are artificial talked intelligence, good the a analytics, growth. using bankers we've we've the management them, that team have systems that skilled very given tools We to about at

touch Vince, the you betas? So on if could

Vincent Calabrese

guess of I yes Sure, that. on comments a couple

If term results you our have looked lengthen at CDs. quarter the the the as to our commented current of for opportunity we did I on,

people CDs So XX% we generated We XX-month and then. into that CDs, some back And higher XXXX. that in did and of We on had the there attractive cost borrowings lengthening put good but also XX run retain were some $XXX million there six XX-month on it's five to rate. comes some about so pursue. of CD to about able opportunity is we've in very so the that a move then year $XXX and at short financial of we million out to money term at strategy

of which kind we're So duration during us lengthening that's as move funds our well at the where cost quarter forward. will go of two the there we serve those items and

total was As bit. far up XX% little beta went quarter the as mean from the in deposit to it for I third third themselves, up the our a Interest the betas bearing quarter, XX% XX%. went so quarter, deposits XX% in from

If look kind XX. basis, deposits the a of on at bearing interest actually spot betas was you

average was So was at end than lower of that the came XX it as and September. down from it spot the

of go at from a we it the I to first it was on not betas quarter. the decent quarter, somewhat slow the the come that - into put by be as down could we So betas and a the to amount in mix would level continue think I to looking directionally, to fourth expect on. depending quarter, expect we would in But what into first the grow

Frank Schiraldi

you. thank Great,

Vincent Calabrese

Frank. thanks Okay,

Vincent Delie

Thanks Frank.

Operator

you. comes Jefferies. And question next from Haire the Casey Thank with

Casey Haire

guys. morning Good

Vincent Delie

Good morning.

Casey Haire

what – guide, Fed followup of in, sheet the to the what way know is in I run NII Just the the neutral, hikes in on, so you bake guys guidance XXXX? does pretty but balance it wanted

Vincent Delie

the overall low year-over-year GAAP me there. point I using out in single a comment want guidance is XXXX to number. that's is let base for digits. Well, guidance reported net on The the income

we'd have growing you for digits basis. you We as Regency a So moves have mid-single months, an kind income moves the for the Regency of interest of eight based some do XX% in but if push was are the earning so net apples-to-apples of two of the that for ability on from there pick forecast that Fed in the normalize XXXX, the kind the in we on just as LIBOR borrowings short-term that and helps kind offsetting down prime. of XXXX to up continue asset loans to from that Fed was bring get know were

two So I the there. don't that but that there, impact there's other baked important they was I accounting not make an happen million. in is significant XXXX $XX if mentioned thing of does have the then it point guidance the guess is for that would to the accretion, I And so purchase

million Our in million $XX for is we to the mentioned million $X which XXXX. I to that $XX million been had $XX $XX lower range XXXX is towards to guided million than

make just mentioned, not growing So by some manage just goal but grow to deposits. to is that. rates, around income context loans of kind on net to neutral, put our so we and And bets fairly as interest you do

Casey Haire

Okay great, the so guide? a I not lot year, mean there's to risk if NII the of is a this on pause Fed

Vincent Delie

Right.

Casey Haire

you to know Regency, I right, good continue eight this heard the say I controls with of in that that and Vince, you for to year, Great, there, are know are pretty going you okay. Regency All just then switching think won't be calling you months consolidations. cost branch I expenses,

that you expense growth so a because magnitude or for efficiency just pace, current do, initiatives what branch Just of guide? what's that cuts his from into calling are what up we is other baked step be in or to underlying guide loan – are going

Vincent Delie

years REDI at Yes, will that we initiative to evaluate we've company branch three called project the REDI. play There's continue here got locations. in an

continue to going we're on that. So focus to

from cost savings and we've Charlotte Charleston invested of branch consolidation we higher parts targeted to like of new areas open locations. Ohio growth Some the in that and

in Vince's that think last told you the will of say we be into I'd there would half what saves. that to year something be reductions, expense And guidance effect you'll I so, find of expense baked net-net

the your gave a do in we that. last so, will year that So would number, far I That's to we happen takes we easy this than assume year. XX% It's delivery it disclosed as not last may you about the better as time. channel rationalize not year but guidance. included of what modeling

Casey Haire

less, cuts so are Okay, the but… branch actually

Vincent Delie

$X million expense in reduction.

Casey Haire

Yes, okay, X% capital above and are management I and just share all moves this me about buyback increased know flexibility, hike still or from commented guys capital TCE you right last on then are contemplating one you on build on mode? great. And may you dividend any capital year management or your be you

Vincent Delie

as prior do think to we're the hope ago, earnings. measured and tangible a growing we deal mentioned want Yadkin where terms are where we of value would our I were with anything in so we could evolution growth you to there, back increased payout look so ratio. per years up Well, at build share, beyond our nicely We've few anything against We the be below was we dividend that with possibly impact that. get had book some XX% in to nice

an more TCE much be are growth to thoughtful It I feel about some the that we the of is share come door there lower above but we have one think per in be we based X to TBV opportunity So, upon deployment we trajectory at will is others. and on us the use, the should do range look market which measure dividend at years requires capital start we risk for haven't to addressing for that model end increase. dicey if the a it deployment capital we're doing of of efficient things not point bucks our presents the opens our to certain I to sustain a we're for the be investment valuation going thesis in a sit ago. operate our accumulate capital. We We're things capital since means been in and buybacks that the terms extremely or we provided not for sake here and opportunities us And low place of of capital. in XX company us joined to and accumulating

approaching us ratio in value management. base, XX%, growing, and of pretty solid exciting capital capital for tangible some accelerating, times ratio share the – is capital book nice of terms payout terms dividend for per shareholders in So that's some the

As are $XX per positioned of numbers to to do we're amount us you how markets optimistic some in behind very with know, excess million over we as face time we've and move of year in regulatory things had that forward. burden. we considerable our we're dealt the ability There about differently with and that

Casey Haire

Great, for guys. the taking thanks questions

Vincent Delie

you. Yep, thank

Vincent Calabrese

Thanks Casey.

Operator

And next Wells from Jared you. Thank comes the Shaw of question Fargo.

Jared Shaw

Hi morning. good

Vincent Delie

Hey, Jared.

Vincent Calabrese

Jared. morning, Good

Jared Shaw

when seeing Regency terms we a shifting this XX a little given look the economic in now a could net portfolio just breakdown of be and is a given charge-offs that points to this gone breakdown there the credit, we're are is give little bit stable this you where or we at May what on now, the XX of level this, at point? level quarter outlook loan is basis dollar

Vincent Delie

Yes, in this about charge-off basis. talked company a Regency levels was approximately the little, rate generally of the X full speaking Jared run and past the points basis we've of at

levels look looking at removed that So, we charge-off We're at have in you the performance. as being that could from past.

in as We that You'll fashion. to shown would the as expect we've naturally a long number to that see last over economy continues consistency hold the in, the of continue fine years.

the tell it's how on would we you we book. how and we based consistency same of I go as forward the the of more So manage underwrite

Jared Shaw

growth very and good thanks loan on great, then growth C&I quarter. there the this Okay was

to of some be has the seeing any in expect CRE pressures see when to past? On you of is back significant or starting competition other may abate, side market the it in that non-bank as those as still competitive you the step start are the to been do

Vincent Delie

am We're so we that an in had acceleration a I'd that still prepayments large surprised in book, quality portfolio. not we I saw payoffs. higher seeing some say

were makes clients by investor. attractive That able a non-bank to occupancy quickly. stabilized Our an achieve for investment

So would a payoffs we've at are Gary you we clip. seen should give wane to pretty color it cycle. where the right in let suspect on steady here. start that more I'll I

Gary Guerrieri

the Vince. been standpoint, construction I as flow with them and stabilized. time move would insurance normal here. with activity that's steady mean they've years The that really it's and in permanent I three two pace for seeing ago Yes, a multifamily agree projects financed that a half what at to It's we the a markets life company we're space. to the mentioned from a Vince

Jared Shaw

me, you per taking on are network and Okay more expanding just dealer finally you indirect auto product are from the or the just then dealer? still

Vincent Delie

other of have marketplace. able do we dealer basically the it’s group to core one been us. XX credit and in has We've volume growth as core of Pennsylvania marketplace. that a here our in dealers mind out do forward. XX do we're book than We've the with been asset to network the perspective, we run a that rolled our we that very to the talked Pennsylvania is past Keep credit earning as continue doing stream in for add business continue we'll And dealers have from there and good a first and good markets we not to Yes, to it group Jared years in Occasionally of banked timeframe. any there. from move

came us the at Just during paper volume through so it for average and FICO on XXXX as performs new it's a touch very consistently point, time. very good XXX, in

Jared Shaw

rate the the indirects year? at And the spot the of what's on end

Vincent Delie

at billion. the The point spot $XXX the spot about, million and was rate X.X about was right spot growth

Jared Shaw

No the the it? on I mean yield rate,

Vincent Delie

the board it, follow the have is by We'll I fingertips up that throw upon yield of to month. with imagine types on of a my call it number right category we you now, don’t it could mix because comes the don’t that. that depending all vet automobiles at financed. after want particular every you different the because on that being in Oh, over I

Jared Shaw

thanks. Okay,

Operator

question Thank SunTrust. you. next comes with the Michael Young from And

Michael Young

good Hey, morning.

Vincent Delie

Mike. Hey,

Vincent Calabrese

Mike. Hey,

Michael Young

deposit wait it pricing here and half? Why year of deposit pricing of do don’t the of there pressure the CDs and kind some repricing and year we throughout cetera question the the of if hikes, growth the kind half year this on of the kind see you some back go forward deposit think we the or is how focused areas to the of much in we on see remaining and any more some et front you in and is end back of and have first circle don’t Fed

Vincent Delie

depend competitors. industry reacts how if don't rate to on hikes and think Oh Fed it's the I going you non-industry see

a on on because it margin depends to some that how crazy be of into out rates rationalization say growth so hopefully increasing entrants. particularly will to got be pressure Fed if come You've because out maintain from play there would lot I is rates less hopefully. plays new the side, going not there's there see asset the you'll pricing

we we to the growing tend a price of us, For pursue then up household. categories strategy and certain

that the which paying. of that as deposits bearing more that bearing interest well in priced higher the gather, an rate the comes we element for we're with attractive non-interest rate all there's makes So

be that past noninterest which want we in deposits. easier our on have doing, those I our of think of mean and those to have gathering, what's technology and bearing root do make the what gather it's to Fed hikes, So lack we've the industry noninterest banking. commercial hikes that responds of and move it what's to the done really the function have business, deposit event, the economy means for cause that product features true I a be going In in to appealing into a any all we how of will lack as in to in that. banks the focus That's overall more is it consumer that's be best this prepared, driving and cycle offers a invested the way to I people have been like prepared consumers think be bearing and we bankers happening and small like that will

Michael Young

you managing side see in slow focus growth kind asset not we of or know for adjusted any repricing the terms you greater return if if that you even risk you're though not Fed of to the and guys that? right start rates getting on moving or just and Okay, things pressure watch would the is monitoring

Vincent Delie

with Yes, actually we've or grow more we've - back multiple been periods, than pretty more time if better you been look growth able deposits we've over loan than. mean I commensurate to over successful

of a say we do. there are things would number could I So

that action the the are the think that loan factors base applying there at I operating some back is particular would that taking pace Right? is be not And than because impacts customer addressed other us expect. they you're that in means by and reverberates a if pressure. demand. moving not Fed economy so doing Or that the through the more anything environment

think things there could ourselves, are dealt I So do be we'll we control. obviously but that hand without

react past. which So, to have like do what as we in and we margin and take the able be team we management to to protect appropriate actions would have the the is necessary to it a

Gary Guerrieri

add hurdles The we opportunities shelf to in I there's And would direct our we asset we wanted securitize to only loans. mortgage create is if could that on know if you more growth have side meet the thing loans, we have space to. categories and could certain

could in So that shelf so do things space in. creates the growth we that you that asset there's the could side the want to on you bring bring

Michael Young

then didn't of there? and Okay, if just period perfect. last on one and kind you backburner you And that in mentioned any is mention the time dividend of increases, still could update capital, sneak on one I a buyback specifically for M&A,

Vincent Delie

a difficult. through the I where industry changes more given think has tremendous I Yes, it timeframe, some valuation short it in sector makes think gone the stands

As per tangible focus on is value our share accretion. book I said

M&A we regulatory we were of standpoint. given because I what do accomplished, to we've facing a we what today think stand from had were

hit full impact impact people over, $XX wasn’t of year that going XXXX. emerged many in billion company mean, that was I think ago. long the forget I that over this with ’XX, really got full

a M&A evil. the We quickly. So take and cope regulatory with grow to had the the burden building cost expense to to out out burden We associated was with had infrastructure. risk necessary

we're we've has built that franchise we're tremendous some So, I nice of in markets. that and value and think a a that through amount intrinsic fairly dynamic

drive market opportunity in and new Pittsburgh and have we like growth and the share continue Cleveland an have to markets those in in we to So Baltimore, take markets.

think managing going that driving book focused on to share growth. that continuing stay to on we're tangible I and value focus efficiently and squarely So capital per

Operator

question D.A. you. Thank next And Russell comes Okay. from with Gunther the Davidson.

Russell Gunther

Hey, good guys. morning

Vincent Delie

How you? Russell. morning are Good

Russell Gunther

core there, Hey, on all I in your footprints? circle pickup growth opportunity and driving seeing and your what's large opportunities you're comments wanted of corporate that the the C&I to to the kind is back growth in

Vincent Delie

I'd It's say in it footprints. the of the is core we've part experienced. growth

the size move today to Our of us balance balance sheet sheet, the enables up-market.

We from just and to that some experience capital of in have we of M&A have institutions related, that big corporate are a seeing lot investment that's came much are larger transactions, number a banking, happen. are starting people some

became changing factors and I the the spreads of we're other see out when is the play. in spreads the borrowers larger that they facilities the broaden larger the we're still fairly to credit banks broaden pro shift corporate bond and getting When into When market those their a thin, companies bond for into a rata market. start start competitive, So to tailwind back. credit seeing And there's market, bank from shifted bank, moving come back economics it there you back spreads mean to bond shifting. and are into capital.

with us of that's on of corporate MSAs got larger call got we've seven very with that in companies number large can So M&A little on you've been opportunities all into that for compete new. some that, bit a so a and we We've borrowers state play we comes large activity. you've and that, across of got focused all a area, six

those profile that on new a are in without we markets the can the of changing risk company. way So capitalize reasonable the

Russell Gunther

that. and impacted could right, for talked All monitoring the really government that thanks then shutdown track one last you me, to about closely tariffs if And on the Gary from here. portfolios by continues be

perhaps exposed if particular some could where give meaningfully? you on you're if watching you find yourself in would color most and shutdown So the government you us what extends

Gary Guerrieri

concentrated well. issues major they're borrowers at scrap any impacted have one-off got point. not potentially do steel overall industries That's Overall, well. a some on it's that tariff some seen we're we've But one-off dealers, very Right, space. very on We've close it's I you specifically are close to so in terms terms a something as that mean our the in related, this impacted China that anything so business on business in side. basis us, a clients. keeping mean of the of, in the we're talking metals that I side, eye core on Yes, that. for as target to exposure,

any vigilant in this major concerns We it. of point ahead to clients stay to our is to seen talking at continue news to date. to The haven't remain talk we and them good

As at government a is we've market this $XXX business, got a our Washington small about book government shutdown - of far million as the it's contracting we've concerned, DC got point. in

are space We well operate all to have some as smaller do as impact got something itself to with clients. at short at monitor the any in has clients sheets not resolves They've us that in and continue normal. continue them this shown talking basis. here sometime. until seen point, hopefully to that it balance run very those We and any that's Nothing large we'll concern bankers but on have regular our a

Vincent Delie

portion government But the still three impacted by that finance government people who the aren’t entities that quarters closed, the there's that's of forget the is we of functioning. so

in you where So, employees in major cities need you have know employees, I for think the might the portions time might impact be relief. to for us over that may example Pennsylvania that area, of Maryland TSA the - who some work

recently seen right. it a lot Gary? of haven't We

Gary Guerrieri

in a clients out have called that handful of we've reached that point to. and this it's At than been less

Vincent Delie

we've if on to for there's a call. people those you encouraged website number that put our out away. We look So, right

small a can't We and get program business that's be relying Federal that paid. have distress a it's on the any Government to with deal experiencing would

reason some to We struggling need financially because could so the are those that advertised Federal of provide part the was we relief. of to Government That the employees number, of sort it. relief help of that are looking that we

not play lot it's of and into leading since a up early the place then. to put stuff activity early seen to shutdown we date. all So in very on, We've the been on,

Russell Gunther

it guys. Thanks that's questions from my taking me. okay, it, Got for

Vincent Delie

Russ. thing Good you. Thank

Gary Guerrieri

Russell. you, Thank

Operator

Thank you. next comes And [indiscernible]. from question the

Unidentified Analyst

morning. good Hi,

Vincent Delie

Matt. Good morning,

Unidentified Analyst

loans of So, the and a the moved quick re-underwritten of couple been book point? matured, at book, into loan have regard questions, originated to what those with Yadkin percentage this

Vincent Delie

have if Yes, I answer don't circle to to detail that I fingertips much we have portfolio. with that. let relative you, anybody, have somebody at we else I'd think my know question. that back might I that don't to have don't

Gary Guerrieri

number. big a not It’s

Unidentified Analyst

and how conversations Okay, and your Where us there? regard related. with you so give CCIL, you to of are gone it’s a running but any parallel, regulators detail your you with can and sort different question auditors are

Vincent Delie

can no model developed kind making an good process. step I give progress in which key or models validation of I you being development in are our mean, the, We've is the Sure, on it. on that. process started update a

do year Our runs plan this is numbers. April throughout to parallel beginning in with QX

that of Committee, very for working a and months part meeting been have Management as has and Gary and I We Standing the both active months, you on that. full imagine are would that team

year there in that We delaying they're there's study, just may do or going with are also plan continuing But, out assess say it may proposals and along to moving developments monitor on so right we together some of to would that and there's and the on we're not put an eye result FASB track an keeping path. to I we're couple that. also project impact

Unidentified Analyst

for or on update outlook you do allowance to have impact provision potential going for might for what forward? Any your

Vincent Delie

we said expect as still, early kind second and get the start A quarter lot We're of that looks some the would in at models then the second like the in to of validating quarter. models, to I impacts. developing the

Unidentified Analyst

very Okay, you thank much.

Vincent Delie

Okay, thank you, Matt.

Gary Guerrieri

Matt. Thanks

Operator

Collyn KBW. the Thank you. And with question from Gilbert next comes

Collyn Gilbert

guys. morning good Thanks,

Vincent Delie

are how you? morning, Good

Collyn Gilbert

Good.

[ph] on move monetization that's about throughout kind you maturation could NIM, of of are Just of hikes, natural an whatever. on within not excluding given a and XXXX, trying any the that but trajectory again this the kind expecting occurring to the NIM? we think question understanding we as NIM was repricing quarter migrate to portfolio, get kind the the rate assuming neutral for that so XXX the of adjusted NIM impact just core direction gradually just higher rates, of that all If

Vincent Delie

mortgage kind the on. as the pieces The mean kind you mix of put been have I and last couple heavier on the of side Right? things. have are Yes, know quarters of of lower indirect on the which been that earning depends assets of we it

will help the move get that So we this commercial more growth the up. year margin mix obviously wise

Fed how to that months much all today the betas have think the rates expecting move three, far get the sit the of we The in as down volatile or challenges kind have don't last a know four - we as so rates to with obviously come I moved. helps we margin. if where been

hard the stable NIM at you so mean to core of a out but would down get first kind So on the get would which you deep fourth get purchase to to of level quarter, look ball year, quarter you we it's crystal take add all the then kind the accounting as if that purchase compared kind accounting really point I Collyn. and you good you XXX, that's perspective this to the of have into the share to of XXX if expect ahead I top

Collyn Gilbert

million Okay, did the reduction operating hear that's up but guided expense I came that guide the in you $X then helpful. you're about percentages for say that… know of And when question OpEx you to looking I ’XX?

Vincent Delie

just You specifically that. are branches, the yes was included to branches, speaking to the what that's

Gary Guerrieri

whole looking is this there's for processing year. there's re-renegotiating variety contracts guidance up contract Collyn our us So a other cell into or initiatives phone, and too, issues;

a going consolidation is for initiatives benefit. variety branch three after and the there wishes we're the So

Collyn Gilbert

it. Got

part in delivered would Damon's just question, maybe to to sorry, apologize trying just net but offs Gary would clarity Regency in I what finally, thought have that? I on ‘XX of down I'm question, ‘XX and wanted coming but just relative charge on ‘XX be Jerry to if get the I this be that's then would is And in levels, helpful. understand provision certainly without that's higher you ‘XX. coming guide Okay, I guess in than I'm

Vincent Delie

in guess was $XX current the from want portfolio. reserving anything guidance in to I is we for credit described on we're and at outlook loan to comment charge-offs million ‘XX the which so Gary of $XX the as the based I position our ‘XX range good and XX.X. for guidance a enter mean add on XXXX year a that $XX.X plain Gary growth you Yes, provision the then very the do quick the provision $XX on quarter, if But to I'll make you look million a else. full then

to of full how of is but is year really get kind pretty range that's what how combination about the So you close to the X provision. thinking the of for kind which ‘XX, had the we're that of we

Gary Guerrieri

that's thing, Regency for the going basis. earlier, go to mentioned things basis a remove four you if as Collyn, And right forward you on points, size

the So absent range to subject consistent holding. be from Regency, that standpoint, expect charge-offs economy in we a to

later what the and later comfortable get we does are with consistent that the to everyone sits our good feels No once We as tell feel point. underwriting a it at portfolios in about where is year you economy, cause cycle so today. impact? feel can We any this very one

Collyn Gilbert

Okay, that's I'll it okay, Thanks leave there. gentlemen. helpful.

Vincent Delie

Thanks, Collyn. much very

Operator

the question from Wallace you. James. with Thank Raymond next And William comes

William Wallace

Thanks, I'll try to be brief.

segment. for an income lead about continued Vince of fee in guidance, in the growth hire you and the you commentary like your sounded the prepared also a business the mortgage banking then spoke new about in On SBA expectation spoke it

back? year, at half I you kind look if in on side, get what XXXX second perspective and second just from are of curious, ’XX slightly versus perspective margin down that sale the of like volume it a mortgage growth On I'm looks the mortgage and to gain the ‘XX was anticipating

Vincent Delie

the into Carolinas, should there are that There marquee Yes, of we've producers were effect year. that us year hires and well that next producing. benefit big number a put initiatives start in some should Maryland in this

activity. so Some space, it or is rate margin in pressure of to interest our I'd the some the purely earnings came great volatility - of related say hedging from

an say particularly or margin should are that normalize forward rates in we Carolinas in as in So, should in growth coming Maryland move we steady substantial. some of I don't the elevation gains an production where fairly expansion would and out as things and that see see we begin we environment to have

So that's we guidance why we gave the gave.

Gary Guerrieri

impairment was rights fourth that million $X.X the underlying servicing by the number million. in high a from quarter number, was so reduction there In about about $X.X mortgage

William Wallace

visibility it, drive… with is do don't when of as really enough you sense then an to have new I and can - to or is be on just it the much business there Great, having who the know occurred, the overhaul a is might that it get of to how kind somebody might hire have side, else SBA

Vincent Delie

Well, as business overhauled. you dramatically has the know, been

in relative said SBA were So we've off a time. risk some mode that we to for

anything a slap as opportunities So area volume and end shrinking we've live product that versus market moves hope been on effort national through a more to guarantee the by a on cycle. focusing we a calling that

for he's small going has operating think hails had to I focus when think we're a for businesses might it's person provide collateral to I flow. I engage provide used think in it, a use that the to product capital deficit they but utilizing way particular we companies not product cash have region, it's venture where so the great it's slight a or to deficiency, this had or changed some companies want the capital from have business and issues experience and that to utilize

area, incredibly the discipline. very It's we're it it's to manage volumes a particular a about think in optimistic So to watch but decline ability the risk take company's going about difficult and to speaks model. different revenue It's I team.

is mindset in get to here. seats in doing said things with out alignment and in direct we of production the bankers XXX% he's as sales have I new the leader of and ours this place good the under people have We the that his some

William Wallace

process balance given pressure you or to whether follow start in on there market zones? decision that, those to paid one and premiums have on not you the been has the some sheet the to some around guys, production might want Okay from any of

Vincent Delie

on balance quality to sale high we choices and have because production Good not it is can and up. some we the is put sheet we enough make gain our those look deals the that news about doing better on of give

sell it anything more you're don't the under you the volumes something of when your willing credits. balance also not So it about if profile put model, know just previous those to and to Gary? want speaks I say risk sheet on

Gary Guerrieri

all put the we we've last the periods and been by on the months on No, doing basis making that we've sheets credit six credit been have there. in plus more Willy, decisions recent for balance along the

William Wallace

using originated I've as somebody's that's shortfall, smaller is slight need And the out and where bridge we're how and there that they is our because said collateral are collateral there credits a growing business footprint shortfall, capital product. of that's

Vincent Delie

put is model total a keep changed mind the All lot would to, Willy it's we've two we the in mentioned. important add that point, in last mean the I one which business other years I to to think as in context, feel the but over activity a share, a pay. over of picking that I we so up, kind paying good little about is in contribution total about your just little it's

William Wallace

I'm Yes, it fourth guidance one you, quarter shifting correct wondering I'm quick in thank looks you're what expectation in credits real your my tax the to rate. includes dollar on how the additional amount Would and of you. anticipating credits. in credits of tax I'm gears give if were the ‘XX like some assumption? you'd if

Vincent Delie

math. Yes, I mean you can do the

the the as booked in tax if after the And of For we've the we'll $X couple that a I quarter. tax quarter guided bank of said it's the at on fourth been of operation over for business, wholesale part a to this. that little million, it's rate least this we side think is and our you rate do math continue the part effective leasing years go for our and to business

We in there that 'XX better. guidance. have ’XX, a the do, a up little is level pipeline depending could we we that do for have we so how of teed And some on

the bringing into business function it's So bank. a of the

going to the of business. part it's be So

credits, low credits, that the we continue Then well to opportunities focused have as also that always tax more do we have this We that. it, for are we've with more these other we're have looking tax been on as we in broader housing so pursuing. store tax income will we're there's to and And pursuing, credits people after opportunities. go R&D markets

more that to So on we're the our tax tax the definitely lower active credit side for rate company. effective

William Wallace

thanks Okay, all. That's guys.

Vincent Delie

you. Thank

Gary Guerrieri

Thank you.

Operator

comes and from you Martin question next Brian the partners. FIG Thank with

Brian Martin

guys. Hey

Vincent Delie

Hi Brain.

Gary Guerrieri

Brian. Good morning,

Brian Martin

outlook I about portfolio been being lower off but guess, I is I'll you some it's runoff? how lower, give it covered, or less run mean it's guys a talk one I that short a in the acquired Hey lot for keep just just Gary, Gary, since maybe been did mean just I it of your for on trending you're impact sounds that about XXXX can like that and you thinking guess guidance but

Vincent Delie

the comment Yes, is This $XXX actually on Brian could for It the runoff quarter mean million I was was $XXX that. acquired million. quarter. I Vince. last

the lowest is quarter second This of the year.

quarter the So it's in really number happened had looking both from I running even just be a was you to been it's I year. up payoffs footprint well for little But it CRE so than the in still prior and mean it quarter. of that definitely a Carolina like shrinking I footprint ahead as to the lower last would the than kind it is Metro that it bit went XXXX why have was was still the the mentioned what of XXXX. of where number of full-year with lower book, the additional pickup second third a in function lowest really expect

Brian Martin

then why I and optimistic mean and you're to at a right just little about guys just in optimism you here? having those but didn't regions why back talking concerns you reconcile outlook about Carolinas climate meeting mean well and other better, all regions you I going on and hear get XXXX up into I'm the get little the understand talked I you may as economic that those guys guess the the other about I be growth may go the expected, two, trying you just two maybe better picking the two two I mean when trying some you up are guys bit up, I look to just growth doing talked be to slower, not being guess them bit as they just as why what well regions being you and those two have loan Okay, on a perform

Vincent Delie

Oh good we have because people the seats. in

lead backed to there's you being production portfolios taken the CRE good the there out – have that's that We should if out growth.

So the we're performed nicely. two not up concentration on The had in they giving so better more base, regions actually C&I that expanded them.

because I'm The two the shaken we've about tree. optimistic forward moving other

that want got the gone. can lot they We've up-market, we that of pipelines. didn't a seats people there's So have move stuff the in them good decent

So Carolinas the total. good about we're in feeling

there's investment that's So of should bit there a that little personnel well as why. in off, been pay

Brian Martin

don't small I just And but helpful. that's a the that that? back the impact other piece government mean going just you're really your it it is sound comment to didn’t some seems right like minute and that just the small worry I I SBA is It so now not guess occurring, it guys? I on and impacted based it's really a about for but that puzzle, right, of like or? affecting by just so all realize not does it, you misunderstand one, of or shutdown, that to I is that is the business being that Okay, did

Vincent Delie

kind of a bit things Brian in new would them. terms of delays It little just applications it slightly delay like

Brian Martin

all Okay, right.

I Thanks guys answered so the I other think it. had, I you guys. appreciate all questions

Vincent Delie

you. Thank

Vincent Calabrese

Thanks care. Brian. Take

Gary Guerrieri

Thank you, Brian.

Operator

call question And this last comments. you. I return morning, Thank was Lazzaro to as any to Matt that the the closing would like for

Vincent Delie

with Delie payout the again. well questions. I'd company. Vince everybody had I'm for very We like it's to company of performance we the And last thank year. pleased actually keenly the of Well call. stay very risk great about, performed of to we continuing way The participating lot in outside in us creating on value the take us and focused for present a doesn't down, driving on tangible areas risk ratio appetite. the dividend book or that growing that spoke focus our

again, to plan. a we've arms there. game a forward So good expenses have We've good got this looking think got year, plan and we around very year our strong I

So we're performance. good, and leverage positive looking solid, operating some for

calling the next for everybody call. forward look So thank you to and quarterly

Operator

The Thank today's you concluded. attending conference now has for you. Thank presentation.

your disconnect now may You lines.

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