FNB - Earnings call transcript Q4 2019

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Operator

Hello and welcome to the F.N.B. Corporation Fourth Quarter 2019 Quarterly Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this call is being recorded. I would now like to turn the conference over to your host today, Matthew Lazzaro, Manager of Investor Relations. Mr. begin. please Lazzaro,

Matthew Lazzaro

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

CEO. I will now Delie, and turn to President over the call Chairman, Vince

Vince Delie

to and welcome our earnings call. morning Good

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

up for open then questions. will We the call

metrics like would some First, I highlight from XXXX. key to

per increasing and share and driving value EPS and positive higher capital leverage record We income ratios are $X.XX. $XXX levels profitability in pleased net of operating tangible internal operating resulted capital strong These with million by of book XX%. record very generation

returned million pleased ratio this cash of $XXX rate reported to nearly amidst interest dividends full as dividend a volatile revenue as growth with F.N.B. are our in year in XXXX. total payout billion $X.X shareholders. We we totaled XX% environment our

to X% growth This average and loan Mid-Atlantic deposit Our success origination respectively. F.N.B.’s our loan portfolios and with production expansion from and growing across came in the X% and of with markets. expand deposit legacy continue strong contributions and Southeast markets footprint from

operating in Our with all-time non-interest records fee-based units an XX% many businesses had outstanding for setting year up income revenue.

X%. management banking footprint. expansion personnel income in insurance execution strategies fueled For example, revenues and capital from benefits wealth grew as the our by solid businesses, products and and increased are a capital increased XX%, across markets investments mortgage XX% our as markets we combined In realizing well geographic the

progress spend and to tangible have XXXX report the value want I per set growth XXXX, made discussing on minutes equity at returns letter. historically book in internal the share. the initiatives drive key towards tangible Looking out we annual few deliver and a peer-leading to previously capital in common generation We outlined

was top a shareholders. translated financial to return XX% is to our of to peer-leading our to F.N.B. in others book value total placing industry. relative performance continues In equity quartile in the commitment our XX% tangible longstanding XXXX, again deliver value the to of strong common shareholder tangible supports peers. above further average XX% on in return This and XXXX Our growth track

superior and our out delivering returns, we capital dividend to return with tandem to In shareholders. protect set attractive

equity highest December. common this accomplished X.XX% have nearly decades goal its reached level tangible two in of of at the as We end

deposit a prudently optimize goal post-CECL and the stated management portfolios, deployment superior organization by credit of loan grow maintaining risk added in have all surpassed and capital to culture. Looking while have to overarching our and objectives now quality revenue ahead, targets we These our environment. our stated flexibility increasing support our

metrics, asset loan many single-digit another deposit improvement we further while our and mid and in growth With growth strong had mix. improving year funding quality also

As this the $XXX company. more nearly remains deposits than million, focus a X% across as critical proof grew a bearing point, non-interest

household Additionally, we acquisition and existing have deepening focused on new relationships.

we total and $X increased than For deposit million, X% growth planned the a of X%. when year, or time $XXX total decline deposits more deposits had in brokered strong nearly excluding of billion

insurance. businesses, a In Next, units over XX%, our income capital total record capital increasing we supported or million. and $XXX markets of grow our the which management wealth and banking, out to namely mortgage exceeded $XX expectations XXXX, both banking fee-based directly set with diversify markets, XX% non-interest up each mortgage to income and million

Additionally, becoming optimize the data-driven a branch continue bank we to to aspired channel. and continually delivery evolve towards

technology year, We retail and ready in to program. and on as in Metro novo Charleston, we the experience. focused locations in we continue Carolina. in announced risk infrastructure platforms execute established management develop are and plans area Throughout Northern investing the Virginia upgrading bank we by to branches and de Earlier as diligently XX customer XXXX, efficiency the improving the in D.C. in closed our well South

in expansion locations strategy our further and plans strategic enhance retail variety in attractive efforts corporate geographic markets. Our of a banking these

strategy, population share with growth As the million. X market a X execution than of XX X greater evidence are successful of top in of firmly we deposit with out markets major our established

is to XXXX on rates in points in pressure strive significant continue to basis XX year ratio despite challenging we improve efficiency efficiency to a and XX.X% capital to rate and improving interest manage investment Lastly, evidenced technology. our XXXX from environment cost. ongoing This

a quality focus evidenced Gary in continued will various All through many and to asset proven XXXX by metrics successful further. the will upon in is discuss XXXX. accomplishments very these strategy we momentum led key improvement the that on solid performance strong as and cycles Our build

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

Gary Guerrieri

levels that and position current expectations very portfolio close of are favorable with Thank at good out move tracking a our into had remain solid pleased as XXXX quarter consistent metrics you, We our credit with fourth key the everyone. remaining we Vince XXXX. with morning and to

only will portfolios will two be of few on focusing and the are combination. X, performance but on January XXXX, the brief of you end expected marks today aware, which I highlights for update to accounting effective to also standard credit majority commentary provide the our all-in of provide of GAAP standard, Therefore, became I how prior acquired on my for loans methodology a originated a a books in losses account the not brings business the loan As our reserve acquired to methodology the changes under new performed. for results portfolio. current these credit on total also

total point doing in assets. up X year. results longer on be accrue trended with long-term with reported shift A good to loans levels. will trends XX-plus OREO they are from consistent similarly books these NPLs better successful current Let’s that assets basis to accounting The position in points. non-accrual December as basis in prior XX of presently treatment, results. of no to track worth of points, long-term positive noting very level QX few levels the continues of over the to workout XXXX basis on majority QX improvement basis delinquency It’s the acquired result bps manner as GAAP when we period QX. the are will prior historically strategy improving points reported our on interest low over standard and continue showed basis moving the purchase a cover portfolio bps focus off category. due beginning criticized so portfolio X attentive the the is continued were a ended and a positive prior quarter’s we trend very the proactive to Regardless CECL. The by the focus now in and sub-performing up of These credits these current accounting year-over-year over past a at XX of the XX acquired stand as at our the

for As it annualized The loss million additional million prepared on reserve and at totaling and and adequately charge-offs X for at points remarks. million his provision Vince the relates quarter during quarter charge-offs or at CECL the these performance, million periods. full year to $XX.X XX full commentary or levels for basis end loan $XX.X for Calabrese to points. the GAAP basis $X.X growth some solid remained provide $X.X the net the covered loan year will

I at $XX.X provide while the basis NPLs XX bps to stand solid levels charge-off ending basis increased at or annualized bps full for originated the year fourth $X.X comparative originated quarter to X will against net portfolios at net prior the X some basis linked points. million with and million for points. XX totaling Originated quarter. The touch XX OREO were December charge-offs bps acquired the now December XX and briefly on results quarter, points, up at of delinquency book level ended

also trend favorably continues perform to decrease. to portfolio our expectations marked $XX year-over-year a in with million reduction continuing by with acquired XX% representing delinquency a line levels Our contractual

processes, points in long-term which we possible results our credit books with are lending entire across bankers disciplined out across portfolio none business. proof portfolio As all without successful we experienced of close consistent be stability take pleased the and our would positioning of and the our of our of and are in the team consistency footprint. solid another credit and we decisioning the of year, The approach

our accounting later core standard at changes brings, New credit stage objectives principles to the to this profile the the economy. help risk our ahead maintaining we and move remain asset mix we As desired to CECL growth balance Year of with committed and the

are looking portfolio the ahead to performance XXXX. are Looking very year business of we forward the pleased our of the in whole us back, and with throughout opportunities

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

Vince Calabrese

the Gary our results XXXX. provide and I will and fourth financial morning. quarter discuss Today, for for guidance good Thanks,

on year of over EPS increase XXXX. $X.XX an X, operating quarter X% bringing Slide noted fourth to full EPS XXXX totaled $X.XX, As operating

share in As share. meaningful $X.XX is numbers tangible quality. the level value X.XX%, period demonstrate the The is nearly at the highest providing two level book favorable at Vince maintaining per our decades. at previously over same TCE asset while highest value per its focus These shareholder mentioned, also ratio on

to of with X%. and Linked Slide sheet $XXX consumer average the annualized growth XX% quarter balance of totaled of attributable the on start fourth or a growth commercial loan million X. for Let’s review X% quarter growth

impacted consumer home X% or was estate XXXX, X%. equity over of in decline mortgages X% line saw balances partially X% that commercial increases of the Spot billion by by pay-downs in Focusing also and increased on as offset activity by of side Spot space. C&I growth by was real in loans balances. was origination credit spot total increase million direct installment driven on X% residential in that continued have to led of a commercial end good growth $X.X $XXX year loans of relative balances

with basis, quarter annualized. partially The decline managing of in time offset anticipated bearing bearing deposits linked more XX% from $XXX balances. time a flexibility on was CD a in decline changing environment. deposits X, X% deposits shift million brokered The average deposits, grew non-interest Slide deposits in on by interest rate Continuing and the a annualized bearing in in growth allows to nearly XX% interest of costs

the a income X, loan clearly decline the the the to rate variable the margin. narrowed income interest the interest net from of place environment X.X% points net rate net basis million, on quarter Slide on $XXX.X statement and X.XX%. us, an unique Turning is early impact had impact cut to not XX rate as totaled in Recognizing interest interest taken quarter to margin last yields

the down LIBOR net October in Specifically than a X basis. basis fourth XX and We basis of month decline mitigate points quarter, more partially points the to able cost fell on asset basis yields interest basis LIBOR interest quarter, with beginning X points an quarter. XX in from XX average Compared the third X as declined improved which some the on to were alone, slightly deposit of expected. the margin bearing month basis another spot the pressured points

help move confident support re-pricing XXXX. variable have expansion. deposit at in loan decline saw we of and deposit February lag LIBOR that through expect net end move to rates the interest we yields, bearing support to relative the interest October are margin as December interest While Furthermore, rate will costs margin deposits we the our gradual in in deposit consumer anticipated cost promotional will down we net in we

interest net stable quarter the margin then year. the relatively gradual expansion throughout a next of expect rest margin We expect and

to and Slides for be X a and markets details There performance trust mortgage banking, and X continues non-interest in income income operating and income non-interest provide expense. as capital strong whole.

interest exceeded noted earlier, with Vince mitigated which are As rate results and fee-based the significantly importantly XXXX, we pleased we movements in our our extremely expectations record experienced.

in side. from Looking million, mainly income to fourth operating we impact $XX due on offset quarter X% the service non-interest was banking results by quarter, as third from called from mortgage on an at decrease lower income quarter income and our results charge sales out the the and refunds record lower investment. down X% on markets last SBIC totaled the estate gains level a non-interest saw capital of a strong from basis, On real

Slide flat pleased incentive relatively we merit to to Expense relatively services, flat from strategic expenses due XXXX to management expense and equipment, professional technology over investment compared removing third outside payout million On and a Turning X% item are core that for tax higher renewable priority very investments performance. increases quarter. X, the remains normal related core top to rose and held the non-interest accruals when strong remained basis in non-interest expenses the credit energy the a last software XXXX. quarter, $X.X and we

I Lastly, for points for impact with portfolio our phased-in from impacts the related we disclosed basis. fully TCE basis of like XX expected losses the of XX% XX from previously estimated on credit to to loan capital CECL a of to to of disclosed capital XX Last XX% increase XXXX. to the would reaffirm and quarter, capital our range range points basis day regulatory originated allowance for expected X CETX to the XX adoption

the allowance no established CECL the on marks are balance remaining credit of of loans the prospectively or our marks impact. day sheet of the results these recognition acquired pools. on is at the reminder, over non-credit loans are allowance in and to X a Once $XXX life discounts income CECL this is similar million opposed as accreted portfolio, process interest $XXX The into remaining level on except the to maintained with As the the the of accretion remaining gross-up a current portfolio portfolio. acquired loan to million and transition loan that capital

overall the to be expect to numbers. allowance XXX coverage using ratio We XX/XX XXX

increase X they LIBOR single-digit to loan a rates stable All like moves million income tax I reported to which levels will to includes outlook results for XX%, Provision to mid of CECL. to and remain Fed in of month XXXX rate XXXX, tax with and full the would all XXXX XX% Now, are which year reflects over few and the expense is base the additional outlook is at range, our year. Net in level rate interest $XX for Effective years. non-interest experienced for year-over-year some on comparison we last low have of note single-digits. be the a I yield no provide expense December. income, XXXX to to million expected were includes non-interest expected at guidance end the compared basis in deposit the credits income curve the impact of growth. spot $XX

over will call that, to I turn Vince. With the

Vince Delie

and of our experience tenants want as on provide customer interactive improve as interactive Throughout a investing we website XXXX, The to delivery a well efforts long-term proprietary we designed creates new launch focus an Coming quarter, and infrastructure of with enhanced to experience. shopping our in one-stop intend update. website our covered continued January, strategy we physical technology. new functionality. Last digital to online our this deploy the channels major to Vince. the I optimizing Thanks, and

a our We customers. are streamlined excited features for account the new and about opening process

long-term in future customer in to and growth. critical our exceed Our turn ensure have expectations to and support that innovation revenue our teams the ongoing investments are company’s objectives resources

quality and elevate Carolina we South years, in to continue we markets. our successfully Over attracted North especially few as the our talent profile, high have past

growing We team with of the on these from and quality our the the field are contributions pleased regions.

work over call a the turning operator, team for hard Before and all thank to to dedication entire our the I successful for want XXXX. their

in the our are XXXX communities, to for value. we engage serve with invest constituencies, and great will positioned We a deliver well greater and employees actively continue dedicated shareholder our

Operator

Thank you.

session. question comes with begin the now And question-and-answer Instructions] Frank the Jaffray. will [Operator Schiraldi first We from Piper

Frank Schiraldi

morning. Good

Vince Delie

morning, Good Frank.

Frank Schiraldi

but demand quarter, start you? XXXX? to you promotions strong thinking there allowed was to then was the reduction what reduce really to for sort did, there shift in as you your what the bit talk with Do brokered mix of you guys you what continue some in demand CD will and grow levels, I you thoughts in are XXXX? think this a could little allowed wanted planned see to know in growth in about the the Just

Vince Delie

Yes.

have things number drive We a of demand deposit to growth.

decent compensation each pretty our driving I about past. engage incentive in category. team have We this had talked have geared that quarter the think we increases. I towards we year That’s know it directly one primary that upon based the leads. We categories we so output, scorecard sheet. thing support that do. in data not in consumer activity and of balance activity, one with That’s the it’s growth and analytics with

calling pretty We bankers perspective. from our with a municipal management robust corporate space a in have and treasury effort the

solid simply particularly Southeast services. commercial fee lot So, are we significant and Mid-Atlantic income across categories, balances other because support have fee we and good talk and the the see company had markets deposit growth newer used entered. the the they but in to have income the demand growth a management in treasury in about the we being We

to of year help the to focused we focus a in continues was helped of that’s So called was out all pillars to this the help solid it it, annual it that continued mentioned and see and margin the on growth report we we that and mitigate company. it and good have compression, letter one

wasn’t on focused to did of great silver but drive that were there, that, there of job everybody executing a it Frank, bullet. we areas one So, number a

Frank Schiraldi

that XXXX, to – do but for see of trend… think you continue sort Okay. And then you

Vince Delie

We do.

Frank Schiraldi

demand. in Stronger growth

Vince Delie

do. We

to deposit help that the are bringing down on impact. margin focus to mix cost continue We offset shifting going the to

and slightly of Vince the margin year. in guidance, improve the course yield As we we mentioned the over of because the expect expect steeper stable to curve,

Our those focusing base deposits market and goal that on our very is to after hopefully that to we than going skilled our are variety gain share. people by do funding and use tools help that them mix better within a of at

to and be should focus help continue that should a So us.

Frank Schiraldi

items, plug you to just year-over-year. tough in am about a think you ask given I the sure to to so to just operating then XXXX for you and leverage models. operating positive leverage make as guys was put But we XQ beginning the leverage, guidance And saw of year up be can pretty positive XXXX I on in a correctly gave you in just It obviously our thinking it line about year-over-year in want ended wondering Okay. that into XXXX. just margin the seems that’s me where going where year, versus the of operating bunch

just is move the that – you you will so the the more operating positive levels – is So, thinking for a again efficiency are XXXX leverage down year-over-year? from think get goal you ratio you XQ do to can or

Vince Calabrese

positive experienced. go as mean, say plan, than I No, that the positive just don’t all you would I for rate operating to for ‘XX board challenging But get in ‘XX within the would has without having the our have was Frank, leverage we XXXX. to there leverage. guidance we given definitely operating it, environment expect more it

we expenses had just manage can of faster initiatives expense running of part a do. maybe is in chunk we a that to the that and We lot, of So than growing by out but leverage. than in positive cause and ‘XX it’s but ensure efforts expenses take have obviously get no, going expenses and company the baked additional significant as the have growing as in then have our the faster what we guidance do far not And as is revenue yield that helps XXXX we as we operating have leverage. curve we any steepness beyond surprises similar operating to we positive on within into if that side plan,

Frank Schiraldi

fourth as the well year-over-year quarter. For for as

great. Okay, you. Thank

Vince Calabrese

Yes, full year. Sure.

Frank Schiraldi

Thanks.

Vince Delie

Thanks Frank.

Vince Calabrese

Frank. Thanks

Operator

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

Jared Shaw

Hey, guys. Good morning.

Vince Delie

Jerry. you? are How Hey,

Jared Shaw

Good, thanks.

on is quarter month. first month expecting But LIBOR quarter down funding margin, be And what gradual I over year hear impact does year you year the we driven? funding any from to is hear but end saying be first asset start X that see – thoughts on continued in you to thereafter that asset for and out benefit rest yields? could do going gradual the the guess really obviously if are margin stable Just points look or to should on yields you really I or as it we we the the end then end. with seeing with already the X increase side, I are increase XX from mimic of expect year, basis how remix

Vince Calabrese

our things. has end curve I say baked a few XX. year the you would the X.XX% June LIBOR at month No, yield at of plan, LIBOR, look at ended if X the into that’s

today. As you is that the mentioned, rate lower than

So quarter first magnitude the saw kind expect fourth to the pressure, we quarter we the built what in not of gradually there. do from have of some and slight then

rate XX-year look again largely year got you end end around our the the the surveys in at have of the it’s X% using by the plan, you and of X.XX% X-year economist is a Bloomberg the at and year. If this that’s

And as a very kind down. from you some know, been volatile, in that X think of back, it’s indication up if there. you of what’s quite come moves and it’s I LIBOR back here LIBOR is bit So then gives month

to XX we ahead have came and down down I first comments, as I another the points basis in there when the cost bearing on a is is on On XX to basis in quarter. there there. average basis, interest average side, short-term, we it’s mentioned So look X quarter, still pressure down. my the mentioned first points But the cost the I still in X opportunity some should deposit the spot

the to would obviously first quarter. relatively help being in stable the that support of margin kind So

being the of X you the the and rates loans tied commercial all up components as strongest benefit month there. I think growth. LIBOR that Those into to largely are the they component get our that it move growth are mentioned, feed as of you

parts given deposit that the X pressure moving on kind the quarter. all mean it little bit where with guidance I are of clearly have that in of what’s it baked first in puts is, But LIBOR the we growth. So, there month loan a and

Jared Shaw

the for And expectation accretion XXXX? then purchase in accounting what’s

Vince Calabrese

CECL, gave Well, forward. we million kind to October will accreted loan-by-loan $XXX $XXX for million in it’s basis that of that the so range that a be in going on

So, it’s period average some that or over by life years, really X but it’s loan whether loan. it’s X

come So will of get you in, accretion. slower that’s the as get get of faster are will CECL benefits pool once prepayments to If going accretion, in we prepayments you in were slower, kind that’s over mode accreted time. but

Jared Shaw

Okay. about rate just And pure the interest what marks? from

Vince Calabrese

that Jared, now, in that’s number. all-in all way the That’s it’s

marks So are pool. the to that XXX XXX total remaining within discounts and

Jared Shaw

got going obviously the pullback it. we going fee that, banking, what are that to quarter mean a that’s the guessing side, for am XXXX bit are other for income in I year? I your and I continuing Okay, guess growth the to little lines see to Shifting great expectations your mortgage in upside outlook? through

Vince Calabrese

Yes, I growing a things the had year. the of the properties a couple sheet real We of key would sale gains is kind overall single-digits. low two markets were capital And are the in lower to other based off gains revenue that cause, the mean, some components that gain lower and some of say to digits able I kind then benefited estate. the service at from charges We rate ‘XX a guidance. volatility then components move this low-single that non-interest income of record year so on on in low the balance off on single-digits. helping coming

to are mid categories high. of other kind The

kind around mid digits are in growth. as of pretty strong that not non-banking good Some Mortgage double-digits so versus growth expected of in in XXXX single single-digits. XXXX, our still level ‘XX, banking but right versus mid ‘XX those is businesses as

Jared Shaw

then to as for the the finally have some as Horizon or acquisition? sort SunTrust, see me, in of early customer well larger additional that down you BB&T place, deal, the taken Carolinas, And First any thanks. Okay, of starting IBKC just opportunities deals opportunities for the hiring from are

Vince Delie

side, have Well, the seen discuss we we have mean, on a getting are meetings customer I in opportunities. and by customer. to change attitude the opportunities certainly

think to interface think these created I up open in past, positive. are I the to but two uncertainty yet those would which They prime They I a has are that, pain, is the not really through themselves with opportunities because haven’t at some borrowers of don’t at the finalized mergers feeling think still were assignments. integrated that. they customers haven’t point where systems. least all going

of given that have fully in So of we I exists established, our are quality particularly think opportunities, we well of have in that to we going the uncertainty, the and we any stake see marketplace have the we market and the to people still a with are we been able bring over. but think course, of I staffed disruption in are are we period kind –

hire employee institutions. side, to always we had have from people opportunities the On larger

repeatedly. mentioned have We that

who long case irrespective to of done there really disruption, the as come who in out job a organizations, whether good people that’s and certain some certainly have We is helps to upgrading of tenures changing be in pretty the have circumstances going that market bankers continue larger but well. from of with us the

opportunities see meet will to and with speak We people.

There only but move came certainly are opportunity Southeast, We on handful nearly open a staffed. fully positions will hire the in up we if opportunity. that high-performing banker, to is a of the

Gary Guerrieri

particular Jared, those opportunities integrated. that merger combination as Vince with will gets continue the as mentioned,

new opportunities that have put XX that over let’s to from well. seen say, on the already books we as months transition X the have last, We business

relationship. about on So, of we have going that credit customers new books some size that handle to their their the generated and the based who concerns are already on is

to So, we have seen more. positive benefit. We expect see do

Jared Shaw

thanks. Great,

Operator

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

Michael Young

thanks. on above X.X%. the finally Wanted the ratio Hey, got TCE/TA start front, capital to

potentially of kind this capital guys through levels get some the are sort environment? Is still that I CECL. of and think with we outlook targeting after returns, have for capital in you share potential you been buyback articulating the what

Vince Calabrese

a acceptable reach in hard tangible know as would the enjoyed ratio payout say, ratio I year. and in where value working to have is really guys nice have we been years as point we we and Yes, TCE have through that over builds gone level you the dividend many book

repurchase mentioned, we of quarter. activity, will as the full CECL the share Regarding the by you end impact see the first to

of things purchasers need opportunistic that now, on types then price opportunistic like to and plan mode doing the things shares be those depending incentive continue for kind purposes stock in right you that valuations. of in So repurchasing short-term and will

just earnings and before, the the building to more solid build programmatically to have there position capital outlook, we to opportunity capital with good the of not going shares are repurchase we and the be books. stock further optimize monitor will move we it on the the will said the As the we and think and for we we past get CECL get below economics back kind value is earn as closely think intrinsic in as well sake year. of year through We

So, us depending all we looks where period. on become would I little once kind through more expect see CECL that to that of active are

Michael Young

a you you Okay. capital about of deployment? kind specific And as ratio watch thinking is there are that capital

Vince Delie

being is have operating talked of target. is a good, us No, we that X.X%. there key to The a for an is in X% is range I and about mean set not the ratio TCE X.X% but north ratio of that getting north

makes when the to gives going repurchase at that right sense X.X% quarter-by-quarter to not to us comfortable level shares then are but basis, We to and opportunity manage the are do it we ability it. that a on

Michael Young

that were a the all growth leverage the And year-over-year questions, to you environment clarify wanted from mentioned you macro I plan had slow, or delivered and included generating prior just committed of something operating that the positive even loan basis? to on you or are kind if Okay. to

Vince Delie

Yes, run company. that’s of how the part we

Vince Calabrese

Yes.

Michael Young

you thank very Okay, much.

Vince Delie

Thanks Michael.

Vince Calabrese

Thanks Michael.

Operator

from the Inc. Stephens And Preston next Brody question you. comes Thank with

Brody Preston

are How everyone. morning, Good you?

Vince Delie

Hey, Brody. How are you?

Brody Preston

Want base, you. of LIBOR Thank more but well. sorry Doing are missed percent percent what to if month I X and specifically, – what touch this, tied LIBOR? loans to

Vince Delie

or is XX.X% and loans there to $X It’s another of $X.X prime. total is Sure. tied X billion then that’s tied or month LIBOR billion XX.X% to

are the kind two moves. time any that the those of So, Fed move pools

Brody Preston

days? it is XX when Okay, great. these that. Thank you for typically And loans do every reset,

Vince Delie

month. Yes, it’s kind of throughout the

Vince Calabrese

are on them month of a Most it. reset, on X are them right. of Most

Vince Delie

Yes, various so through days the month.

Vince Calabrese

Yes.

Brody Preston

Okay.

I average strong period the maybe of on quarter flip the to loan you X% Is some basis, towards so the had X%, and over pretty sheet, some linked to was average but was plus wanted Just balance the to annualized maybe it were a think consumer only looks end to quarter, it fair indirect. relative pay-downs say? that that end there growth, like

Vince Delie

Nothing unusual.

Vince Calabrese

mean, end week they the right nothing have do short-term and some you at year unusual, last I that instruments pay-down of during of Brody, come Yes, the the the due year. tax

two into move or impact did you So, market. secondary transactions CRE one the have some have there. We

the So, was there the year. impact slight right at of there some end

Brody Preston

Okay, with alright. you overall, But sort feel pretty mid sheet growth balance that target? comfortable of single-digit

Vince Calabrese

Yes.

Vince Delie

Yes.

Brody Preston

Okay.

deposit step lot the quarter? by bearing guess, I sort understand the if from strength, of touch to on strength but that the could drove different, this of you of a want Just a perspective, lot what wondering non-interest to back items, just driven of is you a sort different geographic

Vince Delie

well. very perform legacy markets continue to our Well,

We have had the wins footprint. number a across of

in investment some it’s just I a customers. Mid-Atlantic, were have the in commercial mentioned wins helped which treasury made. management well technology the And a mean, Southeast, top large and overall, process managed have we truthfully very really there from So significant from we perspective bottom that in to the

rated by mobile Our is very S&P highly app Global.

help all teams the and with sales invested equip have our to information. in to We use infrastructure analytics along digital

bankers we well. the scorecards that digital are have daily We to as folks, offered scorecards retail that have branch personnel. the monitor Commercial

a ability bit of compete – so... driver the sure energy spent bank against able process have and our drive a expenditure So been and to to our sound why we know and and then largest a country. have but here, technologically deposit that products F.N.B. personnel some resources That’s we of are good always a advanced the of both a up managing demand and stack into we the and of we really I given the measuring competitive are our well have key a that that performance products of expended in from quite competitors and that growth making been bit spent standpoint and very lot capital that providing with we have has services and effectively people services success name time doesn’t like quite

Vince Calabrese

there is of we lot In have the markets opportunities... entered,

Vince Delie

of markets hope mentioned are from that the formation. The of over markets have that There more we last mean entered did few we We continue an think we into have we study our that could moved grow, we announced in. felt the the geographic reap to the is markets than acquisition. We the is years. population M&A the much expansion. benefits extensive they thesis we and perspective to business we growth. dynamic effectively. We I compete proven are I And when there an

operating cycle. creates us it think as the through I environment move very we for a positive

Brody Preston

Okay, great. me. Couple more from

on wanted this drove Just to touch quarter? charge the refund what service

Vince Calabrese

determined customer gone we certain related have to refund service ‘XX transactions and and certain we back customers. that Well, evaluated to charges activity would pre

analyze are to sure of customer As to appropriate are responses of offerings, just activity challenging service kind charges. we our part internally. overall customer just steps taking product make related We continually we and ourselves

a So, going the it’s really one-time item. doesn’t forward. run-rate affect It

Brody Preston

with the there? the guys then of wanted initial to sort South And strong some hiring pipelines just some and what you at Len’s and the so touch the success markets on pretty Okay. of around hire and Carolina Day, following Investor his look had commentary the –

Vince Delie

pipeline strong The very is there.

the some have a great really We attracting there, solid team of and down hires, done job and talent. Len had have Elizabeth

and locations be of to should been. and we middle next us of is above $XXX because has moving So, very by the about year, a we for the are to positive number million very open going year. pipeline the clients particularly optimistic commercial into our have Charleston available It are and

about very feel we good them. So

Vince Calabrese

really. the ground Yes, running hit they

Vince Delie

They job. have done really a great

Brody Preston

I Alright. more And one then if can.

sort of M&A sense, here around wanted XXXX? look XXXX just to to we reiterate any and a your as thoughts forward potential Just from get

Vince Delie

Yes.

we as lot a position going think markets. that of not is disruption in we I that look markets There established, we our company exploit forward, in we great still on think I have are we to again, are those we are operating are – focused all around us.

significant I think opportunities organically. to have we grow

out last generating investments we de operating and and we investments. we and perspective, done to job technology opportunities and disciplined being great for good the going of think an over rooting growth to some in from few continue I are expansion novo made and still leverage positive have have very but do expense a that years

out think website with will a to demo group I We be small rolled shared the going it a and is you. be very of well received.

mix, this what helped a on to never expenses. but have margin in I would field we environment manage there that the and and manage to expected things help, and teams as without the end a shift predicted, positive where the year outcome. together able always get out predicted. came have deposit a XXXX well. or and like just come we ensure we but through We year think deposit opposite rate out not been end income. we growth those income we fee a us demand I with interest focused and little they we the cut tighter We are quality team with in we that expect produce other favor It’s what times of expansion to the lot other a that this in the the fee as got the which coming. has is Obviously, we is good of exciting in credit and

Brody Preston

you everyone. much Thank Alright. very

Vince Delie

you. thank Yes,

Operator

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

Russell Gunther

Hey, guys. good morning

Vince Delie

Good morning Russell.

Russell Gunther

stronger number loan to what then comment of expect so loan well on off strength for Just of if wanted two, be follow-up of on I as that confirm that is growth of you one, that you? drivers the could vertical would your growth maybe sort comments as for you to markets guide and sources an growth, just end-of-period

Vince Delie

Well, let guide, will question Vince period the answer I end… on it’s

Vince Calabrese

yes. period it end, is Yes,

Vince Delie

Okay.

that DC number success, have from where focusing on of and DC. are focused area, on we think I So a in we in the C&I particularly are great we had areas growth perspective, there Maryland

necessarily have income. opportunities business done we in into had expect but management with solid can year. not significant so larger performance have treasury that on in a derivative I moving additional next good We well continue and focusing the garner market, we increase teams year, there up syndications this opportunities vertical, space to a fees, as extraordinarily fee that where

the scratched only have surface. We

CRE If evaluating. are you have at of number the projects space, look that we we a large

are latter factors been portfolio that. the not are Personally, come signed focus. certainly to I about smaller But careful credit quality be that expecting has on areas that being been half not appetite, of I because slight there we other it deviate, the has growth. that expecting trade of there. indicators. also We a principally I to need agreements It’s is and two go – very we is than year new but positive deviate still historically. are stay after, because job tempted of drive some I to I a am slower. believe in contraction are those think Manufacturing in that around better those our will But feel credit doing our what king are we the this back focused we think a of a little portion the that am and markets. But that

of opportunities. to through able everybody those and particular bankers training in bringing small a bringing and credit lot source much business and more money spent everybody are trained foundations through our have skilled We people. We training those

do to SBA year. a have significant expect They We pipeline. better this

that really, event, more be a on still will fee income So of the side. but credit

in the business perform small footprint better. to expect general also across We

We have changes some there. made

we there can in growth. banks areas So those remember, concentration the our are that the banks the And one number markets. dispersion if we where of and few produce you has size attractive are of regional geographic

of our go to DC, changing that a large and Cleveland, risk after the ability achieve be in without gives prospects Pittsburgh, Washington us our number growth Charlotte, Triad, objectives Piedmont Raleigh, Baltimore, for us to appetite. the So

disruption side plenty growth a of opportunities us to area. lot loan a on of from and that strategy the entire perspective. for is there after the So across is there go That’s

Russell Gunther

be would growth No, relatively last a follow-up just for as curious question were that’s a as picture, kind the appreciate great guys pay-downs ‘XX in? I color, would a sort And it. to stay that of same, or does environment contemplate be, reduction that of what’s headwind elevated to for in outlook my baked guess big Vince. the just I

Vince Delie

I wasn’t right. in ‘XX, it pay-offs large million, was pre-determined think $XXX sold it Yes a really portfolio We sales. it ‘XX was mortgage

Vince Calabrese

reaching. Yes,

Vince Delie

into sense there made and a did, CECL intentional things were environment. financial that some So that were we going good

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distressed number I sold we a had Regency over $XXX moved at Finance. sold assets prior you if think the of out year We we that look acquired. and we back million

quality So you we environment, pristine. saw an created was credit charge-offs quarter, our this have the

should So having but continue reach I cycle truly were going where for how years given the business believe XX from I that benefit can’t those for positioned are to self-imposed think we been into were well, we just this we in they the quality – headwinds, credit are and we solid as good growth.

our disciplined. trap that We the achieve have profile we so the changing without opportunity so to geographically anyway. thesis be aggressively everybody falls expanded would the investment we to risk That’s that that’s and why have

Gary Guerrieri

Hey, Russell.

strong from continue to well. very Just in back the expect its has will expect through one early that it it continue throughout year. XXXX activity as additional we CRE, comment, to and secondary do but as slowed relates XXXX activity we market continues the ‘XX phase tepid It and

Russell Gunther

That’s Thanks, Very I Gary. have. much. you all very Thank good.

Vince Delie

Yes, thank you.

Gary Guerrieri

Thanks, Russell.

Operator

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

Collyn Gilbert

Thanks, morning. Good guys.

Vince Delie

Hi, Collyn.

Vince Calabrese

Collyn. Hey

Collyn Gilbert

banking kind growth in of for Just quick for mortgage just your had the growth, resi in just mortgage know I loan your kind last Vince but for of XXXX? how outlook fee you on the thinking one about question, balance are you curious outlook commentary, mentioned the

Vince Calabrese

say It’s into I the to the probably in mid what’s what to overall we year single-digits sale kind would that in mid and baked similar another half single-digits this of may year. did single-digits do kind of second of is mid high we the

like loans time, this would is household able of a only there period year. to expand later product have certain not you something we that are and over mortgage in the jumbo CECL, if a relationship, single again you For consider that doing if where

of baked of too. kind that’s So overall the single-digit into kind guidance mid

Collyn Gilbert

that between refi Okay. then resi what’s are overall in kind of you seeing now are purchase robust business? mortgage markets, you split these that more the and just And your in

Vince Calabrese

interest XX% rate In year it given was a quite was expect Well, it before. this bit movements. purchase the the the quarter as varied would you XX% quarter, fourth

just activity where some rates coming So of you refi through had kind additional were. given

in normally of mean XX% So, in normal state. XX% kind we purchase I the of are kind more activity to that

Collyn Gilbert

Okay.

that’s all Thanks Okay, guys. I had.

Vince Calabrese

Thanks, Collyn.

Vince Delie

Thank you.

Operator

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

Brian Martin

Hey, morning. good

Vince Calabrese

Brian. morning Good

Vince Delie

Brian. morning, Good

Brian Martin

kind growth Hey, most just things which baked this the you guess two the I and into the C&I loan have I growth of when at been a for benefit, C&I just single-digits. the But look the Vince, just know margin me, covered. mid its is in margin. year component mid think a your more expectations grow with it single-digit help Is on how of fair or line in the the it little that is of just you just actual to that bit than more are kind single-digits that’s thinking guide? about

Vince Delie

I would the line with in say guide. it’s

Brian Martin

Yes.

Vince Delie

that’s as that is. and estimate – sit is where best hope guide, we the don’t our today but our beat we I

So...

Brian Martin

I guess Right, at commercial just of said okay. the pipeline? today, you Vince, missed where pipeline but you it’s today, said maybe it, kind and the And I

Vince Delie

Yes, at I or information. didn’t mentioned, in total $XXX Charleston I above still pipeline. give million was pipeline commercial

Brian Martin

Okay.

Vince Delie

solid. very still So,

Brian Martin

any just to commentary I guess give are able on you either….

Vince Delie

I up, is but only right? Southeast, when at component the we look an there think production, example the that to – XX% is I that production give is certain what our production credit Well, of a of because tell we will the thing you talked year-over-year about production calculation, unfunded Vince, you but credit, out commitments, percentage for people it’s for coming

Vince Calabrese

Yes, that right. sounds

Vince Delie

terms the have we number in we solid of had good transactions some of growth book. that So,

had but in Now and year. some the past the off this there is portfolio things Southeast moving, activity solid very, very we is paying

pipelines continue this and pretty where We are expect they comparable to that time. have historically overall to at the been

us gives that confidence single-digit the growth. mid forecast to So,

Brian Martin

– Okay, about or me have was guess branch branch year something I only for operation-ready just how can side year, there is that’s on this other we just kind baked in the helpful. guide, on have And I of the guys guess should you that? expense think this reduction in reduction on thing guys just the comment for just or you you there what

Vince Delie

reflects several would website been we about guidance that I bricks commented. strategic initiatives say in kind things. to our low talking have scenario, clicks of Yes, couple that single-digits Vince the of for investments XXXX a mean I the of

So investment. we have continued

you As know, that’s running of company. part the

We teller new novo de investing expansion. every are branch platform, always year,

we baked again initiatives fund the it the facility to how continued positive company optimizing ready looking we So, that that we into and that’s there that those on the on. side side. all cost have at includes a initiative operating continued have of managing discipline in are have activities the expense management we continued and increased then are we kind normal mean vendor of ready, on deliver those the the leverage management something kind control. The we of the kind can investments initiatives And of expense network, and of is are retail I the of renegotiations, list on. and cash year, continuation each that working long optimization, that including kind vaults in help

Brian Martin

Okay.

in guess to some is about are how there I it, So there fair? just think

Vince Delie

definitely there year. opportunities is No, Yes. branches for additional optimization the this some in

Brian Martin

all Alright. guys. Thanks. had That’s Okay. I

Vince Delie

Brian. Thanks, Okay.

Vince Calabrese

you. Thank

Operator

Thank you. And SunTrust. next is from Young another Michael with question

Michael Young

on follow-up. way extending a rising Vince of the were the the the funding if year. wanted duration have rates had have then we ask for kind people gone locking where in and period last thanks and other we obviously kind Hey, of side to over duration – just of

structurally maybe stability shifts rates, advantage of any of period I kind make sheet are this to more the period to guess? of stable During of this within hopeful take looking you in kind of balance

Vince Calabrese

sense mean I and some when good locked in do very rates that fundings we always year last it did some on Michael. at I opportunistically to we are funding. mean Well, looking, put some made

opportunities. our constantly shifts. mean, any major So, and are at function I treasury we looking mean, any I our we function, don’t have plans for ALCO

to of a where continue environment the asset create there growth. some loan for space balance the the will CECL commercial more side look is opportunities sheet in at We shelf maybe to

to continue at that look will We too.

kind just of we So ongoing. part the how of I mean it’s sheet manage balance

it. is good on if So the either more balance sheet, of do there we will to opportunities do something side

Michael Young

thanks. Okay,

Vince Delie

Thank Alright. you.

Operator

the would closing floor to the comments. I to Thank management for any And return concludes that you. like question-and-session.

Vince Delie

from for the thanks for Well, the year questions shareholders. our you. the thank support all and throughout great Thanks

I think you. looking a and had terrific momentum. Thank we year to XXXX we continuing are that forward and

Operator

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

You disconnect lines. your may now

F.N.B. (FNB) 21 Jan 202019 Q4 Earnings call transcript