F.N.B. (FNB) 23 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Matt Lazzaro	Manager of Investor Relations
Vince Delie	Chairman, President & Chief Executive Officer
Vince Calabrese	Chief Financial Officer
Gary Guerrieri	Chief Credit Officer
Jared Shaw	Wells Fargo Advisors
Casey Haire	Jefferies
Frank Schiraldi	Sandler O'Neill
Michael Young	SunTrust
Austin Nicholas	Stephens
Collyn Gilbert	KBW
Russell Gunther	D.A. Davidson
Brian Martin	Janney Montgomery

Call transcript

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Operator

Welcome to the F.N.B. Corporation's Second Quarter 2019 Earnings Call. All participants will be in 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.

turn Relations. over to Manager Matt like Investor of now the to conference Lazzaro, I'd Mr. begin. please Lazzaro,

Matt Lazzaro

Thank you. and everyone, Commission measures. conference file Good morning, the often call call. our with and of This contain earnings forward-looking F.N.B. non-GAAP and Corporation Securities the statements that and reports Exchange welcome financial to

non-GAAP the financial GAAP our Please an viewed materials GAAP. for Securities directly our Commission results reported be that's our earnings earnings of materials statements our alternative these included financial accordance corporate and in Reconciliations to measures with forward-looking to addition in and Non in Exchange should website. operating GAAP presentation related GAAP registration release. comparable the our to and non-GAAP and financial prepared most with measures on measures release contained as available and measures in reports are not to disclosures statement presentation and refer filed

the July this of Relations call replay and our Us Services About to and A will corporate available Shareholder Investor section will until be the of posted XXth webcast website. be link

I’ll now Delie to over and President turn call Chairman the CEO. Vince

Vince Delie

Good Matt. welcome to morning our earnings call. and you, Thank

are Guerrieri this Vince Gary Vince Chief me and the our financial Gary review will morning Joining discuss asset Officer our Financial Officer. Credit and Chief Calabrese will quality results.

business half Today up strategic I'll multiple call provide then update the I'll year of performance first and -- second reflect including increased for objectives the which the on quarter from units. highlights, provide during open and profitability questions. strong our an

from takeaways our important quarter second three are highlights. There

charge on through million year compared When totaled was and capital of enterprise EPS considering related Earnings to our strengthen non-cash quarter. these growth drive both impairment. Earnings tangible and continue share returns considering operating $X.XX ago an XX% reported on to common value to branch related the $X.XX. book per MSR share $X.X and basis. equity. value First, we per strong tangible and expenses adjustments, And to position a when closures rose

by driven growth operational record loan our deposits. non-interest deposit Second, portfolio and this Highlights revenue, include capital growth markets with banking solid consistent non-interest bearing execution in and performance quarter's was and fees, mortgage C&I financial income.

Washington Our and contributed continued D.C. have [Technical throughout within the Difficulty] XXXX. markets momentum we and Carolinas expect expansion

During growth, expansion rate and than the markets. generated fee second quarter, more deposit to million markets $X significantly wealth and F.N.B and growth revenue also higher our management from loan banking indications growth. contributed revenue new Those mortgage interest income derivative

the sheet Lastly, operating we maintain remixing balance favorable competitive environment. [Technical and and challenging Difficulty] interest asset growing rate quality while

recall, may maintaining As objectives, the into you to we favorable our growth achieve risk while sufficient pursued our growth opportunities Southeast a profile. stated expansion provide to asset all

of serve well disposition performance. we credit through our shareholders higher the cycle. to solid move risk our actions our credit portfolios Additionally will These contributed as

per common and grew X%, book efficiency mix of on $X.XX. pure loan sheet XX% Tangible the linked-quarter Difficulty] origination and fully X% total than of deposits volume. value of the which average levels increased an balance as grew annualized -- loans improve of and [Technical share ratio loan respectively. continued needs The equity to XX%, funding basis, to Return the more leading on again tangible with were

growth With footprint, across growth was loss. XX% solid of loan the annual performance by C&I the driven continued

as bearing efforts stable growth transaction these of to balances. growth. Successful bearing generating able in were we side, deposit funding hold evident we with non-interest core on are the and focused non-interest the XX% On margin is relatively annualized execution

current interest bearing rate non-interest deposit generate growth in to importance utmost the is strategy for and margin pressure transaction of given potential environment. Our the the

we number the of gains number a the meaningful markets of we across the particularly comparable markets market metro a made data available. last when key months, over footprint is in share have in FDIC when growth XX expect -- our our on newer Based to

revenues to $XX record increasing XX% substantially, increased quarter up first non-interest the income of compared annualized million. high to a with XX% Total

quarter. Looking the mortgage specifically at income, we this banking capital markets record drove in revenues

million $X derivatives XX% growth in were mortgage in million. banking $XX several Capital the experienced new part quarter markets strong a markets nearly were for results another quarter Capital to last combined group, large to and rate revenues syndication's the due transactions compared our with business.

as banking pressures potential will quarter, on offset pleased they're sale markets and the production on support our we'll with gain traction rate, generate this to in unit revenue to the confident our solid business increased XX% strong linked Southeast. continue overall Mortgage We environment in and gaining Mid-Atlantic interest performance growth we're to revenues and and look growth. to we contributions produce are capitalize

TCE levels expense the front, in the $XX resulted expectations and in stated to were Difficulty] end wage salary line as goal generation of the tangible [Technical internal our at expenses expenses the by months. second accomplished we with over Difficulty] our share profitability XX core driving last The increased These increasing right capital reach strong run quarter per reflected XXXX. per minimum the On ratio majority XX% our operating [Technical X.XX% in hour rate. of to

you this been for As us know, recent has in focus key a periods.

ratio with added payout pleased of half have now flexibility, for we generate are our first moving with ability future We capital to XX% the that XXXX. a forward

improvement as quality favorably continued Asset performance a evidenced in solid key very metrics. and further trend of quality to number continued asset by

Gary? that, With credit quality. ask on Gary I'll comment to

Gary Guerrieri

with and everyone. the remaining well-positioned. portfolio first We the Thank half finished year very up morning of you, Vince, our credit good

results. As quarter the overall [Technical Difficulty] was second a by highlighted stable and trends

improvement of stand basis XX to level a at further delinquencies quarter showed points. On the prior GAAP over the basis,

XX down trended to basis favorably points. three Additionally, OREO end also and June bps NPLs at

annualized the results acquired points. charge-offs solid at originated were for reserve quarter for quarterly at XX points and basis the portfolios. with net the [Technical Total ending basis Difficulty] the XX

level at linked of long-term and a ticked trend last up originated remain positive at NPLs continuing a portfolio, remain points, quarters. with well which at the few on slightly over basis, to basis quarter a the basis first solid XX ended positioned several move quarter prior up to the a continues in Looking the delinquency but quarter XX over bps direction. points, OREO a

Originated level XX similarly for that basis or totaled solid loan on charge-offs XX year-to-date $XX.X net and million growth. of a quarter for and a at reflecting were points annualized million quarter second $X.X bps. the totaled adequately charge-offs the covered and organic basis $XX.X expense million, Provision

to solid from [Technical expect As Vince seeing C&I in across we been footprint. continue a quarter mentioned have as Difficulty] experiencing we earlier, contributions are that entire activity the we

in favorable acquired of improve billion delinquency the at $X.X with which to Turning quarter credit and end, expectations. Contractual to line a our linked million $XX totaled remain next quarter $XX at the with continues to June results portfolio, were end million. decrease

have of the reduced by reduction June position portfolio dues adequately the a past of basis, mark, year ending $X.X year-over- remains since X.XX%. $XX million XXXX. The credit reflecting acquired and a at XX% of quarter been million, total the inclusive coverage reserve On covered, ended combined loan a

attribute our and processes consistently which first we've the the of the our XXXX we half These can risk credits performance with our Difficulty] heading out selectively half summary, high across we profile We proactively book second principles balanced footprint the each are as finished remains credit portfolio. of In results, credit business. manage of core that approach lending solid consistent and of year. the positioned in of to employ into [Technical credit opportunities and this seek favorably throughout foundation line decisioning quality strategically the and the

our and culture, in As we remain risk, us trends we'll to and mix present continues asset continue ingrained which we are micro for our present and to position proactively steadfast We look economic that stage the manage move well. risk macro approach this to opportunities through disciplined later economy, to the they focused focused themselves. better as on is -- to serve

his now our Financial to turn will the I Vince over call for Chief remarks. Officer Calabrese,

Vince Calabrese

discuss will morning, our update Gary. year. everyone. provide rest for results and an Thanks, outlook on Good the our financial Today of the I

see you As three, can quarter operating second slide totaled EPS on $X.XX.

the great continued start to year. our we As

and build commercial continue the on ratio The quarter and increasing Difficulty] especially X.XX%. points at quarter with side the we [Technical XX TCE the to basis capital

at or and commercial loan look X%. loan consumer of annualized X% balance On on the quarter six. loan basis, sheet average starting for quarter X% a linked growth of growth growth including million $XXX let's Now the slide total

growth up these results consumer X%, while were growth seen continue equity The commercial the in auto to we by C&I indirect was in our book annualized. activity as CRE see concentrated residential as XX% and the was across led across annualized with decline strong the portfolio in continued quarter industry. to the we've markets. of pleased home strong We Growth balances in X% XX% increased up mortgage, while

in growth million Turning and reflecting households average to total basis clients. normal seasonal commercial or deposits deposits $XXX on annualized inflows continued linked a increased and X% quarter

non-interest in time categories bearing strategy. million growth $XXX These deposit growth interest of execute across continue $XXX acquisition our a in $XXX The in million demand to bearing including our was spread to customer deposits million speak ability and to results deposits.

at income from income Looking quarter. was statement the prior essentially net the flat interest

the accounting purchase million accounting cash and with accretion from million quarter. $X.X $XXXX This was in total accretion total quarter million $X.X the a first compares of purchase recoveries. For $X.X from incremental to

also related facilities margin I decrease net in last quarter recorded the on the debt quarter in the margin the points retirement benefit which linked reflected The of basis two discussed in detail of to call. first

decreased benefit in two quarter. the The points the rate to X.XX%, and result X.XX% environment. interest accounting activity Excluding current a basis good purchase we net margin the from first about given feel sub-debt

on The by and markets strong operating $X.X at driven of a income record non-interest of including look Let's level reached now million and income in outstanding nine. quarter international non-interest and increase swaps, performances was eight in in $X.X capital largely syndication. million which an slides expense

mortgage in included compared production enjoyed a strong first to also a very in We the volume quarter. which increase quarter banking XX%

growth and see in with services management growth in securities X.X% growth trust commissions to continue and We in X.X% wealth fees.

nine, slide compared revenue commitment commissions quarter. activities The to which the expense $XX bring primary well and an million to to as increases, our our annual merit operating by wage personnel first minimum Xst continued was driver in reflects as April up our increased the of for end $X.X XXXX. progress generating to increase Turning expenses toward

Difficulty] expense director outside $X.X the and of services as charges annual seasonally to fees. such million increased million $X.X [Technical timing In increased due

to to of like for the year. the turn I'd guidance Now remainder our

single feel been digit Our continue and growth mid high growth in we to for to our deposits confident those and has in targets. loans expectations within

may January, low recall, to you to net interest we compared single XXXX. in digits year expected income grow full As

interest sit we net expect the to two for that in and we guidance had calling cuts. forward hikes today, our here to now end As curve up is closer we income given two flat

banks most the banking curve isn't not has net still we yield by shape the curve rates interest interest know compression. you rate sensitive the seen for interest as been are As helping of while margin slight our all they're outlook the and and volatile industry, impacted inverted some has the as

We closing in as digit mid-to-high single are demonstrated even deposits locations since our we ability last XX grow confident year. organically to growth have with core

We flat million to to [Technical be are for to non-interest $XX million line be for given million income that in favorable to down provision our remained X%. the also with our $XX expectations quality Difficulty] asset range very expect levels. non-interest $XX rather expense to and grow now in to million $XX on at expense tracking We than

the effective XX%. around for expectations tax remain Our rate

be internally [Technical Finally substantial estimates prepare early to Difficulty] management progress January update of to and focus made expect and and Difficulty] steps has eternally for CECL I'll necessary been [Technical October. as give Difficulty] to share on those implementation as an CECL prepared [Technical the

raise our earnings performed retained one expected analysis second at macroeconomic impact don't would time, quarter using during to the capital. believe conditions require the preliminary we Based us day on that

is CECL income interest are similar as CECL accounting a loans first up environment it navigate key Another non-credit into we does note upcoming requires was on today. an positioned interest The the accrete purchase day year gross acquired existing on think that half and implementation. in Overall, rate believe of challenging the discount excellent well will fashion balance we our successfully to of one. to consideration sheet loans remaining a acquired in

about some update give growth an talk will some XXXX on and Vince of Next, strategies our initiatives.

Vince Delie

Thanks, Vince.

the recall, progress may last want teams Charlotte the second with you ahead As In Cleveland, loan announced those to have several year in half region. and update FNB's of very year objectives. of on commercial and major provide Baltimore, banking, we strong commercial had over toward first initiatives I an strong our production Washington overall and a production expectations quarter commercial D.C., Pittsburgh the our

build and update have particularly North and an of for saw Carolina As Carolina. continue the we Carolina Charleston, the growth our commercial of another Raleigh, seen South to and pipelines activity, second quarter to year, South their loans and average in Piedmont in half

expectations as their Carolinas a first loan continue through above to be For year. production the whole, half they the of the

bank, consumer that both phase past, omni-channel and physical is platform wallet. delivery our In ongoing have uniform analytics The next for a channels. has been banking improve provides channels. share customer experience the toward In optimization This the tremendous used includes improving and a online across gaining progress to there acquisition. retention customer we data redesigned online delivery

our targeting are We coming new our process about offer are the months roll to features to we'll and in excited customers. out capabilities new and the be able streamlined

channel growth is branch. increased opportunities new simplify the will These experience experience and stop comprehensive our experience efficiently should digital manage offer us relationships. digital functionality and science tools with to machine at the create with clients risk. investments data match provide to existing online one services and household to in and shopping with prevent fraud through the to of the investments deepen that The We a a more products appropriate organic seamless customer leverage and intent learning products

physical consolidated Through program. last locations we two locations ongoing ready January our continue program, have delivery time. XX novo have our added channel, since and our to de Regarding that long during standing execute we optimization

opening locations Charleston, XXXX and with quarters and novo Carolina. Northern expect of in North coming We more Charlotte, the throughout a de on South D.C., focus Washington Carolina, Virginia to several

the Carolina. expand hiring key successfully Cleveland and have the footprint, bankers an South We Charleston, announced just of very in talent our leadership and recruiting recently bankers team notably continued of in teams across to exceptional attracting

in We benefiting from markets, notably are opportunities XX%. is those portfolio our already significant up in Charleston, where

the to for named best Cleveland and consecutive was year. for consecutive with on ninth work the Furthermore, in employee I that place you share place best F.N.B. to in year to a front, pleased the am work Pittsburgh fourth a

and the and dedication. work our are of to them thank heart employees Our want organization hard their I for

creating serve better are listening highly their communities, to and our focused We shareholder for future value. greater providing customers, by to and needs our colleagues constituencies benefit fellow

that, With to questions. call operator I'll the turn for the over

Operator

[Operator Jared Instruction] And from question with comes Fargo Wells Shaw first the Securities.

Vince Delie

Jared. Hey

Vince Calabrese

Jared. morning, Good

Gary Guerrieri

Jared. Hey

Vince Delie

and Hey in -- out seems it the is like if phone we skipping Jared.

twice. So need question about that We're if you to questions if prepared with good our ask any have a remarks. you or

Jared Shaw

margin you up how for the with I with tied How of think should here? see cut loans, guess looking yeah, we're resi from sheet skips, rate the year to Okay, continued the just should talked of there into cuts. thinking it. we and that, think about was decline quarter-over-quarter with overall heading of repositioning the outlook rate able assumed, be a we about I rate Maybe or the couple the And environment? then, but most in starting keep about balance in positioning a now I'm sort here initial margin to and hikes how we're at looking

Vince Calabrese

margin. Yeah, things the I on few a would say

growth Regency clearly for digit quarter income. net cash was that second interest which comparing had months GAAP for we was And remember also Our to and single XXXX it and low higher original year. in guidance last total recoveries the included mentioned the I eight as was

So, just had that our everybody kind sure was make straight. to that reference of point

income entire With fed cuts, we the look took for given rate to cuts. in switching the said to net be that two had I interest two statement -- increases we look income we sheet as and a baked flattish fresh balance forecasted the to be

references parts If second quarter, make sure clarify few at everybody just quarter kind just has quarter to the a margin you look the first the straight. to for of moving to

of had from our or For sub-debt basis million a retired. points $X.X first we we benefit the couple quarter,

a this if is accounting quarter, repeat itself is the second benefit, would which the change of didn't you of first purchase it's at quarter. margin obviously then accretion look the and points declined it, that basis million, call and I kind So quarter, normal $X.X X in it

saw quarter run think pretty the next that a into did cut. that should rate of stable go is so quarter, leading purchase of LIBOR, accretion The everybody for dynamic, month Fed quarters, which lower was was we one And good you the go we you this this as as impact other couple as forward. accounting be the the

XX are basis and June we total XX% have XXth, of that are declined $X.X our year points the that through month almost billion of So from end one to the loans tied LIBOR.

basis Even Firstly, in look We're flattish of we on in kind in on strong continued benefit fed and the points commercial two of quarter. on of feel And with and side to we side. so forward have the bearing two would deposits and the didn't that's the get corresponding liability cuts non-interest net quarter, the core then be from pretty loan be the to through swung that, growth the the liability interest there. also compression kind good looking side, as for current kind side, that first of for second we dynamic about where has core margin growth it. another of looking income particularly kind the year-over-year – to margin the that impact baking be all flat

Jared Shaw

Okay.

period I Thanks. loan to portfolio. over looking then shifting is now severe resi the this again, that right more One, loans quarter pay expectation? be retaining you at to in the Okay. sort how balances? were would of guess consider decline that downs end with And something impacting of the

Vince Calabrese

additional make I provide Vince comment. a I'd or thought Gary Before color.

will saleable are if the adjustments you there look that loans think spot for at I that a move spot category. – the balance, balance, into

that strong. on margin made We CECL. significant, [Technical the our sale that those is loans it's company we was jumbo exit. consideration into ultimately mortgage very the on the impact portfolio that in loans and took of Difficulty] made pipeline Difficulty] [Technical and mortgage held there We So a for will decision we the

made we exit the in with decision you were So going that line look the appears portfolio be add we It's to flat. that's when growth balance, at why you actually the that when balanced spot to that it back. average

have on which corporate borrowers in well. the space, commercial we the as quarter production large We bank going the fundings in C&I with some particularly significant in expect third

the move diversifying of is well are little before environment mentioned part as that bit reserves where portfolio. CECL along as the we the the us to period of a we in changing a strategy lines So changing the into benefit it as mix

that's don’t you're I So, I anymore to Gary, think know, seeing. you that, what to if want add

Gary Guerrieri

No.

as asset risk has past, the looking in look I we've forward. as position talked constantly the for Vince of we're going think And both a portfolio standpoint, as we at the financially to from and the portfolio mix the we're organization benefit the mentioned.

So what that drove really that's there. the positioning

said, jumbo the them mortgages held mortgages, move were Vince conforming or category could there for some pool a sale well. of sold also into as As we

look So sheet we balance again, forward. repositioning just we – the of as as

Vince Delie

obviously, changes confident I loan we'll on I'd be our say not and we guidance feel these And growth, that, that impact that the reaffirmed can – we growth so make think Vince trajectory. pretty

Jared Shaw

confirm the warehouse related from warehouse you're you mortgages all And warehouse mortgages? – or pipeline – it's – are to that mean, of at had just purchased was Thanks. strength given Okay. those originated or where those sort not where the the those mortgages the to pipeline side to the in I or

Vince Calabrese

of households. are Gary loans mortgage indicated, that jumbo the And we single Those portion over were product were time. largest mortgage them were felt No. as those loans they – originated

said get on capital, them We at our have you have can returns CECL our looked coming. better use a of we achieve hey, higher and we know we – So capital.

and rates of take relatively and – the was let's make some hey, changes. the margin opportunity interest low, we down said let's The with coming inversion this advantage with

going we it's done for to a that move in do great We and while our but the show was again, it to job shareholders, could risk a think very despite – make good of to decisions. difficult continue Gary's pressure. outsized the metrics credit growth, think I I have and and been we're managing evident

Jared Shaw

Okay.

Vince Delie

mortgages quarter then in held The the approximately during of add, of third to I million quarter quarter expect the were the for Yeah. at in sell XXX sale that and there's quarter. sold bucket included that would would about about mortgages Jared. end the conforming the were was just jumbo of the that $XXX we

Gary Guerrieri

Vince. Thanks,

Jared Shaw

with strong Thanks. you for – there made sustainable quarter the in And on then you've markets the just platform? investments – is the capital income, on that think finally is that me a level

Vince Calabrese

Well, was quarter quarter. exceptional I an think this

a into D.C. comments, As move in that or a I had wins southeast our larger sheet were -- mentioned either in or prepared several syndication which we the a and largely both large result so, expansion of combination the balance of our

had in mean nearly I income, million syndication $X lumpy. absolutely, we continue? it's the quarter. that So we expect fee in Do but to

started that So, us I lead have and to that out the to periodically would as have We've built platform. think we transactions, expect we those didn't win I before. left opportunities

again, us early having moving to create a deal. into sheet, new larger balance that opportunities announced enough business. mentioned on And when gives we've the we we markets So, entered sizable fairly that a the

So finally happening. it's

Jared Shaw

thanks lot. a Great,

Vince Calabrese

Thank you.

Gary Guerrieri

Thanks Jared.

Operator

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

Casey Haire

Yeah. morning Thanks guys. good

Vince Calabrese

morning Good Casey.

Casey Haire

trend the half A on so on of guys. How -- you those I deposits in held costs, one on couple the the obviously the year? do you How more number well to do they're -- back time the quarter guys pretty expect up follow-ups CD Hi up. mean, deposit NIM,

Vince Delie

on dynamics Well, six been lot side, last it's months. I some we've there. We -- last -- a instance deposit to really over have CD did on lower had some opportunities think the going that the of for rates

growth actively So obviously costs. is very nice a the The we critical. there. deposits we're we've DDA's talked deposit And to managing in about continue obviously the bearing non-interest lot, have

I So that's that's on to very we're and to think going element another that. focus important continue

have create of strong cost is sale, that space held growth of to about the the shelf the of putting diligently the mortgages talked all that about. we manage like we we to talked Part selling deposits do. for going we're loan think I that coming for we've

loan deposits the critical. fund with So, continuing growth to is

increase $XXX current million investment total funded $XXX was than deposits. increased million you with it fully quarter look in -- at the more loans held for for If

And So that our -- in million of increase then relationship important. seasonally I beginning generates million October, to ahead have we is $XXX of of in balances seasonal kind go which in. that as kind additional typically think come from through we happens normal that July here municipal $XXX deposits

that's So component of kind another key of it.

we manage a on going We've it's it definitely reduce it's which as to So to process. closely. you constant seen some is And just -- are though increased ability -- commented helpful. the

went The checking our this points total four bearing interest XX quarter it first includes in up which the points. market, basis basis money quarter it went up

lot So just lot it's a it. of on there moving focus a of but, parts

Casey Haire

loan they Okay. we And -- in terms then rate side, the your yields know today the X.XX% -- of we just are just But switching the second in origination are to floating now versus portfolio. tracking quarter? within where what's

Vince Calabrese

origination close quarter. one literally where within they basis to I were are Well, point. last very yields the mean

first So, LIBOR quarter impact second May, at does look versus its moving. some the XX quarter. it for from have yield, There's basis if I the about points

coming for LIBOR it's new that. of rates. But the impact point there's origination within So the basis through literally

Casey Haire

Okay.

pretty back So the close that any changes the all balance quarter? just NIM of the in lastly, And then the assume sheet you're in half. at Does like continue in stable structural guide right.

took second you also quarter helped probably book then which borrowing. securities the the the guys In and you down, reduced

of growth. stable? structural contributions deposit here trying get feeling just a pretty the of keep if going borrowing So, plan that part you good to what sense you're guys curious, reductions I'm kind NIM to to for about just Is get

Vince Calabrese

portfolio, for other other than rest production of we just kind the Well. sales sales any have of year. plan the don't Obviously, normal

reinvestment mean So I one know. very that's investment portfolio, just rates are attractive The the component. as not you

$XX strong Cash given that loan growth, let little a is down bit. month. flow about -- a we've run So portfolio the million

fully still municipal not reinvesting find reinvesting So We're that. and opportunities where we portion, we're a investments.

We're balance as in here. definitely action from the as sheet those, but investing far

from we're I else not sheet the As nothing today, kind perspective. reinvesting about talk management's then And dynamics But the growth. of loan portfolio. and business -- investment the a still into fully normal DDAs just in other growing balance planned strong we strategy, sit here

Casey Haire

includes that well. And as borrowings

Vince Calabrese

Yes.

Casey Haire

all Okay, right.

in this year? last quarter. the balance Tax higher Just a came me. one the for for rate expectation What's of the little

Vince Calabrese

we some guide between We for so talked there still would year. business XX% expect tax half that mind of some that. these is Well the about of transactions, to second the have year. We've going credit is full after achieve the the as

So of XX% tax that's you back overall rate down full for year. of kind the brings effective

Casey Haire

Great. you. Thank

Vince Delie

Thanks, Casey.

Operator

next the question And Schiraldi Frank with comes O'Neill. from you. Thank Sandler

Frank Schiraldi

morning. Good

Vince Delie

Good morning.

Frank Schiraldi

couple of questions. a Just

follow-up a or is Just think the in timeframe end quick there's baked is end September of on just a not of NIM Vince two -- rate that you July -- sort I that cuts mentioned July, now, right? that

Vince Calabrese

time the That's Yes. we Frank. have

Frank Schiraldi

as then do income And reflect be in Okay. be backlog banking especially quarter? near-term income banking just mortgage seasonally, the on that in capital non-fee revenues and is well or and the can a was strong markets mortgage real rate can -- then obviously but the but on volatile, that reasonable run

Vince Delie

pipeline into you extremely is I quarter. that the tell going will third strong the

we quarter into least So, sustainable until half at we and to a seasonal run downturn. would be a or for expect a it to quarter start the

very Frank. it's So, strong

Frank Schiraldi

Okay.

Vince Delie

front, On capital markets lumpy. the extraordinarily that's

the in think success but I here, derivatives too good soon to it's area we're tell. having early So,

you'll do So, well. I think

perspective a markets I a repeat think from XX% because it's was difficult it quarter plus. capital to up

be we'll to working So, that rebuild future. the for

Frank Schiraldi

Got you.

Okay. this you like else pulling run growth just that anything would in rate mid-single-digit out I that quarter year? for guide. capital on of the And wondering the the year the a sort quarter. if third in fee my of there it look at pull for If income that on lumpy just back I markets seems the model just and back half

Vince Delie

a this performance up a little pretty was coming. slower much good We down had the units. really. and No, International of not they lot solid things business quarter, have

should a bit. that us benefit So, little

They're staffed Other everybody fully and generate wealth markets. new is know good opportunities. in than and starting well. you that to insurance And significant think have particularly they're pretty performing pipelines some I the

say would it's I So, steady growing. and

Gary Guerrieri

dynamic. thing so quarter, only second only and the The or come they the higher I third other down service quarter would charges and that's Frank, in add fourth is then seasonally the

Vince Delie

in there's nationality the Yes, service charges.

Frank Schiraldi

And for Okay. just Gary. just finally one then

weakness, credit seeing here collateral of weak obviously, get This community I seen remains or of recently? issues if and just banks seen you're quarter some that credit types patches we've you've of number a pristine your any there's and lending from that of some kind clear frothy steering wondered you're

Gary Guerrieri

are Frank, we've aggressive the you we going change that on will that's structure quite and new. not I across been the Those same a just from transactions in been while to tell our it's move of now. a the mean I going opportunity. something -- and been there's more to is that next and walk on for them of the not really marketplace going it's away industry. lot that seeing we're lending

Our realize that they and support bankers that.

So, we'd do the in it. positioned and on we we're focused how this at we very we're underwrite to very continues with business well be the like and portfolio point how at and consistency where

Frank Schiraldi

as a But others no well Okay. pockets bit get frothier to from? you little that back there's pull starting see guys geographically are starting than to and

Gary Guerrieri

across have really all market. we [Technical No, the Difficulty]

Vince Calabrese

on I think when of one Frank diversify my the in mentioned comments you to as about our think why expanded we I geographically. thesis Yes, reasons was

in asset by on market the and class reliant a risk live we business. weren't that. we single a management So, We're or single

that's made hard we've and said I've risk do. to growth not face in to of decisions limit the easy know You

we that action So, that I and have of diversification. result a having think the the metrics credit are

spot play extraordinarily we and trying cycles. decisions moving the perspective from We're good -- through target in target rates. growth high can a don't credit that keep things make so we sweet So, we to

that's that We're stand our -- by And said repeatedly philosophy. it. going Gary that to

So--

Frank Schiraldi

you. Great thank

Vince Calabrese

you. Thank

Vince Delie

Thanks.

Operator

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

Michael Young

Hey good morning.

Vince Delie

Michael. Hi

Michael Young

and income -- just clarify guidance? fee could your cut wondering provision your it I did again out on me, guidance was you

Vince Calabrese

Sure. income change. guidance we The fee didn't

Michael Young

Okay.

Vince Calabrese

given is provision had in that to XX% from first The where Michael XX% We XX% to came lower of year. half XX%. the the we

So kind for we brought to of low the it eight so and again range single-digits, that. organic still down an months, Regency $XX normalize mid and apples-to-apples. the income fee then on basis million really kind for of that compares is includes kind of single-digits XXXX It's

Vince Delie

comment? rate. early saw miss Vincent, I in effective comment the want you do Michael, was Hey, to your a on tax there

Vince Calabrese

-- XX%. the had is full we that there mentioned I year Yeah, at

happening kind of So just then we than this this tax lose on. also the invest that -- impacts we're that. on quarter some deduction you rate of -- related we're in full-year, a that working tax had to that stocks the not did some There's reflective Then tax is quarter yet. the and credits higher

kind of benefit it on there So up for was that year that reversal is the higher brought of than be, little a would the guide tax bit but XX%. normally that that full number

Vince Delie

give this to quarter a just color That's happened on more what that's Yeah. you all. little

Vince Calabrese

it's know I point. Yeah, good

Michael Young

quick that, a we higher on that as Okay, well? of future thanks. maybe And or as should credit amortization that? expect Would follow up up in tax quarters anyone just expenses push

Vince Delie

significantly, Not yeah.

Michael Young

relative that you're kind It to Okay. goes other the for a point? of management. is valuation going X%, at wanted guys back year. the about of capital now how this feel just better thinking like have CECL And above impact question updated to my your next thoughts then kind TCE get on to just sounds stock you drifting into some up

Vince Delie

think understanding before as a that Difficulty] capital payout we've having I CECL components. being move area XX% Yeah, and clearly, around lower through said are [Technical ratio important dividend

able operate -- that so profile, with risk while run our as think a lower a I plan I to to move capital forever. capital not model levels efficient build think we is and we with we're forward, more we believe

that dividend provide returns. invest return capital we move shares and would to forward some shareholders in the capital we back so higher mean, as buying form, strategy can't assuming or changing either I our we

So kind every be. to I good we place that answer, a didn't it's and covered do. it of could I I But luxury gives past us have a that area think great in the wasn't know options. we because

Michael Young

targeted shift Okay. environment in our on kind CECL of your of terms guys ratios no to post you maintain forward basis? capital on a go But that want

Vince Delie

to this we're prepared think at don't I point. that answer

are there We preliminary change information. economic things Obviously can that factors have because into are right, that analysis. pulled

mix. So shift comments our as are balance environment sheet we upon the today based the and

Vince Calabrese

X% about operating today. to -- talked we're the X.X% we've using range Yeah, a range

and and there's move So everything forward that fully of obviously. a then operating good we past. now out the we that's -- still didn't CECL's we'll point Vince's kind of it's as to refresh range have kind where flexibility stand X.XX% that's disclosed we once at in But and point

Vince Delie

here. be little of we'll able quarters a think I we the and questions into to great next them are -- couple Those answer as better

Michael Young

Okay. could. And one me for one if I last

and Just any as omni-channel should kind saves mean, rollout. gets of committed that that expect rolled of rolling or out the to there, additional will couple So out there Is over any hear help conversely, we related next expense me about the expense any direct capitalized? wouldn't be that quarters? we I see jump

Vince Delie

reflected technology it terms of build in already was because rate, run a of is it some in our investments. multi-year Well

that's company the We it So compete investment not years already more technology have step in can take significant of chunk CapEx within past. specific reflected some is so big a obviously the the that There's compete that coming, for through some we back and in -- but last of going our There's it's spend area. other the -- of as on we few effectively. company. invest it

we've you deposit that outlier really desire more the set consumers our product clients. a I to robust to that that's highly an to both can at and think demand attributable had if provide look be consumer business growth

to So success the to branch ability our cost technology. and locations directly those with take is together, attrition linked consolidating by investments is rate having directly lower linked linked those and out are

have There at us going an help there balancing associated to forward. So risk management perspective but offsets. build we're we from huge are other it's that things no expense There looking significant it, that. that related could that a not perspective is an is build omni-channel or the with from efficiency out potentially are

Vince Calabrese

to we're in continue we statement add opportunities have we're disciplined -- you would and where very vendor expenses I overall manage know how as at looking relationships. and income we'll Yeah, the

year focus Our and operating in generating out. positive year is leverage

job find able our cover costs and to things to it's So ways some be then and those some. additional to area, generate reduce in revenue

Michael Young

Thanks. All right, great.

Vince Delie

you, Thank Michael.

Operator

question comes you. from And Stephens. with Nicholas Austin next Thank the

Austin Nicholas

Hey, guys. morning. Good

Vince Delie

Austin. morning, Good

Austin Nicholas

dovetail Hey, maybe question. on to that capital just

you ratios TCE M&A, can move the it's us just remind up, maybe to continuing three Given what on years the ago. been is message

XXXX. announcement since of this week think back I Yadkin your the in

any on your you'd given today? at where capital is So how M&A look comments position

Vince Delie

Yeah, I that. on can comment

-- has of the President XX I and been it Vince became also years Bank. right it's became I since also CFO, think

grade we're we've in -- lessons. suite learnt think So learned right I that enough that and that or great enough we spot, have now

think We're conditions, from point. the I here this CECL. we've that what And is acquisitions out the to benefit to market out not uncertainty built. at the do looking -- opportunity And given we're not with

more working elevating ratio capital we driving focused and to growth, book We solely can. truly the our shareholders have so on benefit way are tangible flexibility every value in we

So -- been expense, there's and that's significant on done a we've consolidation. focus cuts keen branch

the value I to extract continue long to in We to investing. because run, company keep we have think in the invest

And growth in the Gary of of remixing extraordinarily assets I disciplined think balance has disposition and sheet. balancing terms been with

So all long in of that the pays shareholders run. dividends for our

strategy that's with goal we ratios to we return returns its extraordinarily goal. shareholders capital forward given model to our as is the being and capital high And going high deployed is change, have if the business not move need do to our not capital to our not

Gary Guerrieri

acquisition novo avenue able been we've opposed achieve some to into that to strategy how the newer we've choosing that's about, markets And as expanded through expansion we've the rate. de so talked geographic

Vince Delie

production expanding very were have novo that new we're our to with offices well into markets loan is strategy And the -- in that de for markets we gap. fill the both us branches working and the

and base. see out we're our while how build a for to that So goes and play own going customer that

Austin Nicholas

will And about can just growth think ability consolidate strategy occupancy the continue the the novo say paired that branches, to with on that That's as then expense really side your -- de could the maybe you've the is to been time at least the same you it you the branches fair -- to not at number -- -- doing helpful. few because that it will over be novo size like quarters? be continue other relatively be seems given last strategy outsized de to right

Vince Delie

equal want investment It location. want de me Barry shouldn't it a if to to novo going locations to it's lot make trade-off. make we're because in -- in we not more, typically, position to but is a be, to pay A in me a that an asking be new investment, A we good coming

opening with more there's FNB, issue typically the experienced think I associated I branch. think expense a same de unique branch. others novo that's closing one So don't the versus to

and it's a So the best in closing that always branches not one-for-one aren't typically locations. you're they're because not performing

those of smaller, move a models the business novo forward branches people would new is because different other I ITLs ability we we that reasonable as those deploy and more branches, our So say the will to oriented, technology be There's but expense manage footprint today. in given technology. The they’re occupancy de lot fewer expansion.

didn't into think for opportunity we a great there's have we great opportunity move growth the Yeah, scale, higher so I have markets. us that So for historically, us. to

Austin Nicholas

to guide. Yeah, that's of margin NII maybe helpful. trying then some And with just the square comments the

Just us the on to is It half. cash $X million excess that accretion level it created quarter the for like back in expectation the accretion, sounded recoveries. remain a in

Vince Delie

the the last little mean They that around rate run a rest been around been it's point. bit good level. that $X.X was of like move that component I a million, basis quarters, couple recoveries incremental for Yeah, of so have The a of feels the cash year.

a run So the is million that are in but may rate the and recoveries cash move the $X.X kind a number. little good low bit total of

reasonable which for So probably the too year. those around the of rest levels, is

Austin Nicholas

Got it.

great. for Okay, Thanks my taking questions.

Vince Delie

Thank you.

Operator

comes Collyn with Thank you. KBW. of Gilbert The question last

Collyn Gilbert

Good guys. Thanks. morning,

Vince Delie

Collyn. morning, Good Hey.

Collyn Gilbert

The following-up really I on accretion just most had comment. of questions covered, had just but that the been quickly

$X,XXX So in this that or you Vince, XXXX? the thoughts have do at holding trend you going any year, level to million that's think $X.X how for as to

Vince Calabrese

accretion. is we January pre-CECL normal today would we'll include when the our I'm kind I guidance. column that referencing of say, to million, $X.X do No,

reasonable level Next couple use. feels run good a of rate a to quarters like

I that in I similar fashion in we'll that and a where give even loans post-CECL there's acquired the remarks, in was quantify January. the you used January. in my obviously we to the related recorded that that, prepared But to those today, words so post-CECL, still be there's numbers for works way occur will that we'll commented come and I do the will that think I accretion accretion accounting it still think

Vince Delie

were changes you thinking reserves? the that is that what a think good relative was to Collyn on question I the

Collyn Gilbert

I yeah, assume in okay, has Yeah. the would slowed then CECL, pattern and that I -- the similar and then pattern down, to -- be The of XXXX. mean down just just

Vince Delie

Yeah.

Collyn Gilbert

the one accelerating about thing growth know have so loan targets, just of last to growth, been loan on the the you commercial your in helpful. And trends of growth, keep growth good. guys are kind the back-half Okay. loan That's to mid- year high-single-digit then the talking obviously you and in

resi Just I'm on side, make the sure you. hearing just to

kind been growth mortgage putting that So, return prior expect the you resi you up quarters? in to have of levels do guys back to

Vince Delie

Yes.

Collyn Gilbert

-- with And Okay. go ahead. commercial, loan growth the the

Vince Delie

commercial pipeline particular and the strong, into both very mortgage quarter. moving the third are in pipeline the Yeah,

what would say, I yes. asking your to about So would -- you're be if that's yes, the answer

Collyn Gilbert

Yeah.

Okay.

Okay. Yeah.

Vince Calabrese

also. strong the Let's production $XXX the put perspective, of about bit was half go that We quarter sold in for indicates talked a about that, production in in pipeline, as mortgage. we million Collyn, the okay? So, forward third just -- the quarter little -- which residential Vince

with --. said, I it what what So saw would but agree some to I -- we Vince around numbers as that just you as far expect give

Vince Delie

with disagreeing not you're me. glad I'm

Vince Calabrese

around. with No, I you. numbers agree Put some

Vince Delie

you. you for thank putting that. okay, Thank Yeah,

Vince Calabrese

problem. No

Collyn Gilbert

That's Thanks I had. Okay. all That's guys. great.

Vince Delie

All right. Thank you.

Vince Calabrese

Collyn. Thanks,

Operator

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

Russell Gunther

Hey. Good guys. morning,

Vince Delie

morning, Good Russell.

Gary Guerrieri

Russell. Hey,

Vince Calabrese

Hey, Russell.

Russell Gunther

for plan this quarter's Just the to about incorporated are you results. contributed expenses. quick the clarify on in novo annual Wondering you talked could for just de if And me expense size whether follow-up contribution up the guide for us as XXXX? then what merit

Vince Delie

for Sure. becomes The baked merit million, increase quarter was rate And April nova and it's $X.X are just X. obviously de our $X that then million yeah, a guidance. into under the effective like run

Russell Gunther

to Would then a point And would margin. of me. for what the kind for quantify be us mean basis to one cut you great. XX just last able Okay,

this What of your year? for one any kind Just trying might a get if for the a done impact for bit? and sense to NII to guide be

Vince Delie

what the is Russell guidance that and from my is to into think of it what's -- baked I expect this where I Fed quarter. cuts, I kind I flattish margin commented two Well, be

impact of Fed the kind the that mean I is cuts. what's you two So, tell of

what know, I mean... You

Russell Gunther

Thanks That's for much. very Okay. me. it

Vince Delie

Okay. Thank you, Russell.

Vince Calabrese

Russell. Thanks,

Operator

with from comes Brian the you. And next Martin question Janney Thank Montgomery.

Brian Martin

Hey, guys.

Vince Delie

Hey, Brian.

Vince Calabrese

Hey, Brian.

Brian Martin

covered. Hey, most was stuff of my

here. some just color strength if Just see you're on going a growth, of being lumpiness just any the is, give a there as and pretty you kind larger, something bit particularly in into lumpy markets, like fees syndication granular -- kind on XQ just -- you're you granularity. sounds of the just little just talking the loan being capital it's and Can on of Vince it's where particular strong just it more geographically

Vince Delie

When it for and think is Baltimore the message. equal which you to in markets pretty it's Pittsburgh a are Cleveland overall, fairly us. the seems board. like look strong I nearly good good mean I Yeah, across Carolinas, Carolina in at total terms the of pipeline, that's

been principally, loan If you who's pressure, highest company. the pipeline the in is look CRE take under at Raleigh, has their per the pressure specifically, outs, large portfolio officer been under with

of a doing a So We've ago. strong. out well. built great been doing couple in job Bethesda us. has there for team a extraordinarily a Doug has They've years been D.C.

got good large them, And are funding some opportunities on and... has things them on volume they've So but huge with Pittsburgh associated that -- then happening. margins corporate up the not some there's

Vince Calabrese

really it, good. what producing activity. and C&I feels pipelines really good It's coming out of weren't and It's strong. the the all some in that the C&I everywhere the that's really of across Brian, activity up markets, board markets ramped are

Gary Guerrieri

do we're things. not -- credit seems the not coming in and It's Yeah, reasonable. stretching to

good markets I a that strategy of we've those that good bankers So local and the of of done all job managing production. think connections, have having

ago. think I us years as couple starting indicated that's for a we to payoff

Brian Martin

Yeah.

just the I seeing that -- that payoffs -- continues? on someone on expectation guess, mentioned maybe side. the CRE the slowdown pace all, that see your then is Gary payoffs on And the of Okay. ... Are you at so you're mentioned

Vince Delie

be out taken Gary... We're running we're out too of to deals running I -- of transactions think but out,

Gary Guerrieri

we've as about. mean, had a I it's the we during I quarter. -- mean, of a few lumpy it's kind little talked

a You're going go-forward that basis. to have on

of assets markets completion them credit As hold, and up. the the those based the booking the of on lease as long

Vince Delie

takeout tend maybe stay a not little lender. long-term model. mini bridging construction the to and the and then We a prolific We're a business do short. perm, We finance that's

will but an had always payoffs, So, think we that have we I … acceleration

Gary Guerrieri

do. We

Vince Delie

little payoffs said transactions. bit. of And we're running out in a … I for jokingly there

I think, new a we've originated batch.

So, quality is mentioned on, that's a there And ability in periods business there's an capital in the outside space more higher takeout. you as play are where -- liquid. access the when Gary banking it's that transactions, to goes but the acceleration

Vince Calabrese

have So, more as will go-forward. we those we

Brian Martin

elevated were more to or very normal if still ... there trying I I guess characterize just this Okay. it quarter if they

Vince Delie

right, I if right tell -- with you I'm If might me be number. I this think

book. at running the in about million we're think I $XXX acquired

Vince Calabrese

Yeah.

Vince Delie

Is that payoffs paydown. in right,

Vince Calabrese

That's right.

Vince Delie

stabilized it's about that So, level.

Brian Martin

there non-interest then just any Okay. one as was for of last just the that of just in a front. strength That's across significant Just in significant And was quarter. certain on markets I on or this board? anything the there perfect. me mean, -- the bearing kind the

Vince Delie

It focus I would it's a was -- three consumer everybody on say one, it's things. trained bank the Number and up. we

training we've a it's training. How relationship the spent that us people we with associated So, that's money some we're analytics they household help we customers, and growth that tools everyone. lot our using with with developed a to The of a so bank those helped. depository that elevate help referrals data training in consumer interact CRM through able when borrower analytics us to system doesn't have data find

but strategically. ran up other of category, in little the DDA some campaigns, bit in the ad Our a helped has we and promotions stepped we not categories

building business has because and borrowers. So, the and the larger balances small compensating balances third are move that not small into corporate market middle things, market we business just quarter municipal And in combination so space, some -- but we it's contributed. are a as there we're and seasonal inflows, banking have middle with still funded

to see -- we'll So, from should see that. we continue benefits

combination of strategies. So, a number a of it's

look that having or comes the I these it plays I delivery it have some when activity branch before they in an I really all think at mentioned down anchor favor. as then generating branches. And And you our channel, think say to

the was So optimize to door that the channel goal to ability disrupting … delivery drive customers our try in to without

Brian Martin

Okay.

Vince Delie

… anyway.

Brian Martin

across of there or the was board any that? on particular just kind market Geographically, Okay.

Vince Delie

increases We mentioned deposits. We half at FDIC everybody number do comments the my numbers, [Technical an have own and in our Difficulty] markets had prepared well have that when Yeah. don't look sizable else's pretty of look the data. growth in I we growth we over at analysis.

the you period should gains. look those show analysis has a well So at when overall having share to led when done market that -- multiyear is because increases

we there, the think a in again, We we moving did And -- southeast tailwind performed we've -- fast. markets on analysis. at well, able is particular because I as has So, that or in helped aren't which into us. better that is growing that there population hold to and that grow looked economies people those been markets, growth

combination bearing growth. -- it in result in I us of terms that a all of So, that produces and helps non-interest think deposit good

Brian Martin

so Okay. I appreciate much. the Thanks guys. color

Vince Calabrese

Yeah.

Vince Delie

care. Take Brain. Thanks,

Operator

And you. I are comments. time, no Thank there questions floor management would to the closing at any for to the present as more like return

Vince Delie

I'm of questions great today. lot time, the First about of excited two of very a thank all, I'd like for to the the year. first quarters everybody

and I think the our I'd we prouder. company Everybody we've manage. done across job XX and team in of well, has like I the that to congratulate be a spectacular couldn't exceptionally all done markets

So, thank you.

Operator

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

your You now disconnect lines.

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