FNB - Earnings call transcript Q2 2022

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Operator

Good morning and welcome to the F.N.B. Corporation Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. to Relations. conference like Constantine to now Investor with would turn over the Lisa I ahead. go Please

Lisa Constantine

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

Vince Delie

you. Welcome second Thank call. our earnings to quarter

our Guerrieri, Chief our Vince Joining Gary me Credit today Chief Financial Calabrese, and Officer; are Officer.

in basis as We to billion exhibit growth benefits fee with up per execute $X.XX on with record income $X.X XX% with continued loan occurred FNB $XXX of continue even to X% net deposit maintained in outflows operating the mix quarter. linked-quarter record a earnings achieved an quarter of the totaled basis, X% quarter's businesses second environment spot interest and seasonal favorable PPP. share second The its this our million a revenue growth. excluding We rising growth strategic plan of linked-quarter. rate in a net on diversification

expenses ratio basis and Our efficiency of an well-controlled led of an positive on to acceleration leverage XX.X%. quarter operating and linked remain an operating declining

our remains reserve shares solid always coverage with our asset linked net XX% average Profitability equity in the focus and purchased this was a as as quarter. XX.X%. manage the significantly As prudently quality return improved our We tangible X.X dividend recoveries and quarter common million capital ratio payout we was quarter. on

quarter, FNB our the commenced kiosks new announced In North in Carolina. of Bancorp the acquisition e-Store addition in solid the rollout in to digital we all performance branches and UB

from the revenue strong benefit interest in short-term the growth Our rates. Reserve's increase included Federal

on and positive by a growth totaled million or of excluding South record Howard loan this impressive leases proven excluding spot a our Building annualized, the loans interest to environment of key interest XX% are additional and These respond rising fifth million with loans. Total and commercial loans acquired billion Vince growth growth basis quarter, $XX loan first XX.X% quarter consecutive billion, year-over-year was Carolina grew markets. However, XX% noninterest-bearing performance of PPP loans anticipated us the the net $XX the provide linked-quarter demonstrating it's $XX.X linked as or the ability our On reached possess $XXX making drivers led upon deposit and balances record resulted position basis, to changing of and the team's an that variable of $X.X adjustable will Pittsburgh in economic at XX.X% the core and adapt Calabrese North growth. well billion. billion income for environment. deposits This quarter and insight ending PPP $XXX rates. factors rate betas. on or our

spot Our in than is $XXX historical over loans $XXX healthy higher On pipeline loan growth. when compared year-to-date a current XXXX residential to consumer mortgage levels trends. over are linked-quarter first production million with of half basis the and XX% grew million

had increase outstanding Our scores nearly quality First lifetime levels of the credit of with of value. points. delinquency program for and quarter highest is program this basis accounting significant mortgage This of long-term residential total five linked-quarter. From of perspective, XXX XX% quality an Physicians our relationships portfolio a establishes mortgage credit one

of with of our our the quarter. Our across mortgage is adoption by the to online bolstered digitally. loan steadily offerings number of up mortgage growth increase from total XX% submitted XX% applications applications all e-Store success ago rate the with digital The continues year

Our contributed to customers' traditional and branches origination translated consumer digital channel into this engagement also lending [Technical our increased quarter. branch our in growing of in Difficulty] activity

and continue doubled mobile online e-Store have more build we this June momentum. Our since and upon visits than to XXXX

addition with to new in earlier supplement consultative full an the with access of enhance products kiosks to mobile customers we FNB's provide. digital fully intuitive FNB all branches The mentioned environment services. e-Store As and digital interactive access, empowers have to range initiative we an and design to online started

As bank and scalability browse a seamlessly The and accelerated investments the our the or device have to as result, our they growth. of continue customers and enhanced mobile made experience in-branch are and when online services part digital process we've our wherever in buy able products or to easily prefer.

Carolina-based will to in presence the be the deposits expansion a acquisition FNB's also approximately $X.X This Adding to deposit in total proven the deposits increases has to is our in $XXX a $X UB deposits benefit assets, in FNB. growth in rising North of billion a top engine billion of the success low-cost our also Our for acquisition performance and Approximately, of month, granular loans. branches. This North rate region bank Last state. XX announced share environment. million in Carolina with total financial the Bancorp linked are we bearing. non-interest XX% a

to and We well-positioned FNB. are Overall, FNB the team the we excited in environment. about financial current welcome macroeconomic is solid customers provided Bancorp our second the prospects quarter results and and UB

team recent FNB's offer approach of strength Gary pandemic. our on which in the the to has quality the managing is during call and been credit turn credit and to in more portfolio performance our proven a core proactive take the asset the again economic our Gary downturn XXXX comment provide and and collectively economic environment. over to experience. decades of on I'll bank's detail now Gary? One

Gary Guerrieri

and good you, Vince Thank morning, everyone.

to as key with nonperforming levels due levels enter and in credit quarter strength. potential of credits Our positive our as a decline first remarks, second credit contributed rated later highlights in some we a showed the quality further during as Bancorp the the our an managing second second as all announced year results and portfolio. risks. brief our how provide review well of UB macroeconomic I'll update the low strengthening quarter metrics my recently favorably Howard for acquisition trending continued in commentary of environment, for and and lower asset quarter half on the Bank the well past loss position performance on the saw of We'll which We those credit and GAAP we're a as

directionally bps for due provision basis for And level year-to-date June in by and also the annualized. We which quarter. recognized charge-offs $X.X results recovery an commercial the a supported basis point for basis loans at one This at million linked-quarter down million, quarter million at speed driven totaled at minus point the to our was of ended portfolios charge-offs reserve or period, over in early-stage look eight of results. the XX historically reflects points non-accrual prepayment down end delinquency solid five ended declined end, prior growth Total of June versus ending June bps. basis strong credit NPLs the resulted quarter quarter represents in second of one loan expense $XXX,XXX quality prior of or and our in a $X.X point levels. improvements a now consistent with lower $XXX past Net a decrease a in favorable three and model. XX annualized. or basis position our net also low QX on assumptions OREO CECL which net quarter points which ,remaining the Let's basis X.XX%

strong Howard update announced remains brief position at I'd XXX%. a like the acquisition. provide coverage and Bancorp UB recently to NPL the on portfolio Our now

relates and portfolio in in well portfolio to has impact credit overall process material following had to remain the is quarters the expectations. track standard with continues continue the practice Howard, our our it a our perform not it line an We and to credit closely as the As to metrics acquisition. transition with and pleased

will We opportunities of and in acquisition and also UB further additional these markets. attractive position in announced recently Bancorp, cross-sell lending Carolinas the the offer which us

will forefront their program, economic relationships to available customer rising to them environment of faced our remain metrics. line attention in interest of X.X% the client risk ongoing this economic of our risks and and to as impact our of understand commercial rate portfolio, our of and our challenges no to expected to interest at labor our the to loan enables look diligence have Many rate decisioning and the and accelerated perform in expanding exercised like your our with lower with Bancorp's into chain options continues challenge. products estimated base. turn and reduce be economy part we borrowing environment. supply Regarding mitigate the costs credit now banking inflation, to forward this moving as of at I We approach would our elevated sensitivity to that by process credit to credit driven mark headwinds These rates, energy managing customers borrowers. material book due derivative expectations range hedging and a our which UB costs

cautious we to and all book we loan proactive in early lines economy standard and we to of on comprehensively our quality, our or and While ongoing ahead, summary, remain entire the That entire levels, as By marked phase. our can underwriting better into monitoring of a of quarter quickly stress. improvement of to leveraging continue signs the our second recessionary risks in data In the positioning strong of to robust we potential framework, rated consistent footprint, growth practice emerging for possible current credit and the be and economy seen direction strong trends as headed half environment, all and the had well manage by of of performance credit future enter the lending identify sound business, reduced solid year. as loan the competitive remains quarters a products analytics allowing portfolio. metrics monitor forward-looking said, we to our across portfolio and us high-quality credit across remain committed the broader continued

to over Our approach cycles. Chief us call prior I fundamentals that have for Vince focus credit remarks. now Financial our to remains our Calabrese, core on disciplined his Officer throughout the economic turn will served continued well the

Vince Calabrese

quarter which performance growth consumer merger-related PPP strong. Good led of and the Thanks $X XX% Overall million by focus guidance increased June loan offer loans earnings morning will of third for increase sheet industrial shareholders for of is results basis billion quarter full XX%, concentrated in reached average including period-end The of a FNB. captured total growth Balance available strong $X.X totaling million share. to and will net per common financial everyone. the Commercial XXXX. on quarter's annualized annualized loans XX% The third Today, was an growth reported the year and or second excluding was But Gary. annualized majority of linked-quarter financials I growth benefit on second net quarter commercial. and quarter's $X.XX $X.XX. XX.X% per very $XXX.X the the of share PPP. or in million, adjusting or excluding in balance. commercial After $XXX.X income of expenses, the income

Additionally driven it was commercial loan mortgage the X% line expectations organic by equity Consumer of to credit with linked build end the quarter residential of strong utilization continue and will home year. increased through that activity. lending growth

been mortgage mentioned As First program Physicians this quarter's loans. in mortgage Vince growth successful making of has very the net up two-thirds

seasonal loan to is to expect we build. this While the in program continue high-quality first physician's nature portfolio

values. XX% shifting is and and rate ARMs. fixed customers mortgages. preferences ARMs, mortgage that of activity payment has as home for XX% In adjustable fixed XX% element rate originations ratio transitioned rising comprised customer increased optimize rates interest the second Another size mortgage of and residential XXXX, rate given quarter In XX%

X.XX%. benefits offset quarter On interest the was decreased to PPP by next increased $X.X million XXXX wind An of the a net million, betas quarters Knowing Reserve. balances is or quarter taken deposit the income is our a points higher due assets last interest $XXX.X increase given an rate exact income the this it in cumulative environment the and which of during the average this cycle. interest million previous an XX%. growth The X.X% $XX.X several Federal totaled contribution XX as from record basis hiking mind, cycle partially comparison deposits of to net in from the statement, from earning interest from actions area to those margin down. not by deposit important for focus heightened was for total to three main Beta It's December December XXXX and keep of differences rate

First the at than XXXX. is Federal rate Reserve hiking that much faster a in

to XXXX. emergence ratio XX% have third manage in deposit deposit today deposits balancing of the we occurred. total XX% at a effectively deposits mix while our lower position the that a deposit with have able is Second of more And XX% versus end shifts costs mix been fintechs. of at high-cost gathering much at To-date loan-to-deposit deposit and non-interest-bearing favorable

to income expense, charges income from Service million due $X.X merger-related clients quarter. $X.X income million international increase income Turning client in sold compared million On $XX.X management in life loan million linked-quarter to $X.X swap XX.X%. $X.X compared non-interest treasury contributions decreased excluding merger-related XX% interchange received decreased fees home quarter. debt the the totaled sold an quarter. from our syndication, of X% increase X.X% with Reported driven banking, increased customer insurance totaled reflected Refinance mortgage quarter activity capital higher the prior as or XXXX. of $XX.X be given ago second transactions only The expenses in of or $X.X markets. first $XX.X higher insurance to year non-interest million million rates. million and by accounted $X million consolidation during million, markets expenses life branch non-interest million quarter to and $X.X of expense the $X.X income of or of operations production secondary growth costs an quarter of and a and Mortgage new a bank XXXX XX% declined operating basis expense the fees, for linked-quarter in quarter, million the million banking or non-interest largely in XX% solid second acquisition. Capital and decrease of the to was X% $XXX.X markets in production, last or and increase of XX%

fluctuations on employer and of higher employee Given these adjustments Salaries ratio billion expanded an our $X.X down expense our million First $X.X ago Physicians a the XX.X%. and campaigns million will decreased payroll operating for $X.X given the to from rest efficiency came higher seasonally basis. XX.X%, of quarter's the first benefits the be compared significant taxes. Reflective Marketing expense ratio advertising last improvement and program. of seasonally increased paid our expense diligent long-term digital the ratio we XX.X% management, and of quarter's of as launch quarter's to compensation year

basis. XX, basis XXX increase over improved actually common March an ratio per June points share Tangible $X.XX efficiency $X.XX on share value from was per XX. income at PPP book Excluding of a year-over-year

capital While overtime, compared should quarter-end the portfolio the current in Increased $X.XX value to for higher rates AOCI the the accrete into level or common rising as share to prior of $X.XX earnings than tangible back quarter, prepaid. at AFS mature losses book interest the more end due offset of securities that unrealized impact. reduced by

additions throughout declined to in work approximately securities portfolio. the basis significant this ratio to year. quarter, XX to We to as well primarily would Our the more CETX the expect cash regulatory as manage higher of capital ratio remainder putting our X.X%, loan to the points due growth in

UB excludes the announced which acquisition. Bancorp let's to Now turn guidance.

to to is net strong our expected $XXX to digits billion year-over-year the high growth $X.XX we grow projected quarter this single interest growth at with million $X.XX are between a digits a for and the in income third on Full to full deposits year basis. organic spot million. quarter, year underlying $XXX mid- to year-over-year growth increased loans guidance to billion loan grow between with Given be on low mid-teens basis. Total spot rate, a high the single

Our year month. $XXX acquisitions an million This point continue from rate $XX guidance increase to this basis provision XXXX to $XXX million be and for million $XX area. loan $XXX including, quarter. a remainder our guided the on of is and not noninterest is expense in the related expenses the of Full $XX quarter of expected with $XXX onetime this points guidance the third XXX is change to second to a for basis income. does for dependent mortgage reduced currently the not to year the expected initial and with million provision does operating noninterest the high to credit include associated million is between with increases $XXX market-related Positive year income $XXX range branch consolidations. full the the assumes basis net year. revised The range no $XX.X lower income guidance million, noninterest quality for XX to million to of million slightly million throughout for banking due is of the remainder income include growth fee on to Howard with There million

the should that I between the tax the and year the level for XX% XX% on rate which Lastly activity. tax full will credit be Vince. of back to is effective investment call dependent turn With

Vince Delie

disciplined dividend XX%. key revenue, as at while ratio quarterly growth, on control expense a return a In environment, delivered equity, tangible a total fulfilling number loan Thank you, fluid in with ratio common record Vince. solid exceptional payout of XX.X% such strategic of results a record summary our economic team XX% and efficiency objectives,

maintaining credit quality. strong team Our on keenly remains focused

net solid includes reserve coverage. recoveries and quarter This

doesn't hard employees of got the success without in XXXX many offer and call see, gratitude would make over our already for sincere which turn I the As we our employees. work that operator the possible. to have With our to accomplishments my happen of all you questions. can who to dedication like I'll

Operator

Wells Securities. first And will [Operator Please you. from with be Fargo Thank ahead. question Instructions] Jared Shaw the go

Timur Braziler

Hi, good morning. Timur This for is in Jared. Braziler filling

composition. First of remains year coming compositions looking growth commercial the very impressive. but the assuming at remainder guess, loan guide, of of from the just I much on portfolio talk through is the the the which that just expected maybe the

Gary Guerrieri

Yes.

at business very terms In looking participated this business. growth, books the line of nicely quarter. Each we're of of loan the all participation good across

pipelines We're participation Our geographies. consumer to slightly that's in nature remain standpoint, solid. much. continue from a down our good albeit getting across the And seasonal pipelines pretty

The a expense would for us, The a you portfolio. consumer little are that second really home expect. at the the quarter C&I mortgage little you mortgage applications is as slower CRE you a well when be book We'll when across continues seasonal as there. look growth that down some bit equity to with see well, look board, portfolio. slowness solid, in and seasonal as But

Timur Braziler

competitive Okay. diversified And for does pressure, as you seeing face you kind as rates, or that? of of business, the that are new look geography at spread of incremental products you're in mitigate fighting landscape the rising some the help

Gary Guerrieri

of from pricing improvement. that diversified some We've from geography standpoint. the a But not standpoint, we've seen here additional seen Actually, spread late. pressure helps slight

Timur Braziler

close for sheet, to does of But at on the Is growth at and kind back in as closing remaining as we balance guide be obviously. on one? deal thinking guess, you're that slated the advance and in? the that through year, the the year I about that side expectation liquidity funding would willing the funding that And of you're the the year? looking balance end figure loan the color acquisition to funding the of deposit you're that's loan appreciate on How the growth, go how in later incremental Any this sheet the Is of there one use helpful. to fund liquidity. all rest

Vince Delie

amount portfolio ratio. year, close closed There's -- it's get of low. you sitting at size Delie. of principally in positive transaction If be that the bringing The We're for help I funds tremendous because we granularity. I over a at Vince we're that usually mean, substantial is But benefit able transaction the we we'll if are additive basis XX growth. point this us. today, points are look The the that at where this bank. is we're the a on is it fairly portfolio -- deposit XX% will loan-to-deposit to that Yes. that think will

in deposits. XX% have We

is Our it's strongest, mix been. the ever

while down position liquidity we've Our cash, drawn substantial. still is

good think in space I half relative good that position, particularly a second lending of commercial seeing we're very returns the to in year. and the in lending

perspective, we're perspective So in but we're from a good I a place, really funding not liquidity concerned. think

Vince Calabrese

of add kind still just $X.X cash had sheet. balance at would excess the end June, I the of of on the we million

fund million loan of We that obviously, $X.X that So all spot basis. on first was at the the the a end growth quarter. to use

ample liquidity sitting for there's still right there us. So, just

Gary Guerrieri

accelerate win in larger We segment. convertible particularly continue treasury us, management for to the Southeast. That's depository relationships to the in going clients

So, that to I would expect continue.

Timur Braziler

this you. on just you quarter, there yields? seeing you're making for last And for the then what reinvestment Thank me through talk the and book. Okay. were securities purchases Maybe

Vince Calabrese

quarter the an about This reinvested was the rate X.XX% take million quarter. $XXX than into is million that portfolio. last second we rate That cash flows, quarter. higher average $XXX We environment of was the of at advantage X.XX% there. the During to invested

the look X.XX%, end nice X%. rate it's there. benefit above ahead, well and shorter And if So of we duration and up -- continue you to move you as and be the the then mean on I to look wise, so roll-off

Our around just billion estimated be off under is cash XX-month coming flow $X X.XX%.

at X.XX%. So They this probably X.XX%. like on putting putting stuff more were month on stuff

Timur Braziler

color. great. for you the Thank appreciate I it. Okay,

Operator

And the with next will from ahead. Please, Tamayo question go be James. Raymond Daniel

Daniel Tamayo

question. my taking Good everyone. morning, for Thanks

Vince Delie

morning, Good Daniel.

Daniel Tamayo

your you what you given on with factors maybe but cycles. it, indicate where is in or comments mentioned. terms what interesting best -- impact you're think could sure, all that your are of not guess relative that to of for, I'm missed deposit those out actually betas kind I could -- thought cycle just that prior everything very I those Yes. this you they budgeting or shake may

Vincent Calabrese

in this on I into going retail At from has shift no to banking CDs, out. liquidity kind Sure. ship, loans that Obviously, of market all we've been is with level the that play system that still customers generation to add at all occurring. really to would the been how side, pressure this conversations money of the mix deposit commercial have municipal started deposits natural point

If you deposits we look so at far, XX% end XX% interest-bearing on betas where the our total baked are then year deposits beta guidance today, XX% cumulative of point. of interest-bearing we of what's and And into our be deposits, on June. the as X% the deposits what total know based by end for the on will cumulative

Daniel Tamayo

repurchases. appreciate I just other great. question is And share my that. Okay, around then

quarter. a just repurchase steady repurchased You of to looking thoughts quarter, of unable share but thinking of Is kind maybe coming more stable. in shares you're how fourth the deal you're have a of more or outside about amount the quarter-to-quarter you kind this repurchases? been Obviously, period where has it the overarching repurchase Capital that on to opportunistic? you're

Vincent Calabrese

risk I I Those a continue weighting. mentioned, X% we’re yields. would out are a we cash of strong did as this investments target gets come it XX given higher down that basis CETX around increased than XX% at advantage to loan level growth testing, the quarter, ratio start, points of coming about

the So that you during dynamic have quarter. happening

XX% to payout end positioning. what’s the dividend given higher we earnings ratio down guidance, and levels our ahead the generation year, As baked up into by expect of we back the get our our look that just asset-sensitive overall and would to

and Regarding about. talked of kind buybacks, best the is as first of it's same use our loan I capital growth. mean, we organic

be the buybacks a quarter overall, the with in opportunities just eye shared to of dependent growth, in interest. the we for on as of to we year. on make going million-one rest past. have level been And, we shares buy we're But loan the the We that's way we'll be will back. committed did the see shareholder aligned sense, So growth managing opportunistic, to and this fully mean, I capital

constant a process. just evaluation So

Daniel Tamayo

Okay, great. I the I have. answers. That’s all appreciate

Vincent Calabrese

you. Thank

Vince Delie

you. Thank

Operator

The next from go question Perito with KBW. is Michael Please, ahead.

Michael Perito

guys. good Hey, morning,

Vince Delie

morning. Good

Michael Perito

beta any side better would concerned, -- a your start standpoint around with market question. a from questions standpoint. where prepared and in in growth more kind footprint, or today remarks to asked already. areas be it like, how a But loan from Just with just Are the are that picture back helpful. the because footprint? pretty your about, that you ways there wanted I talked environment the the of side there good do certain feel you're I two a standpoint, whether uncertainty of momentum have of growth whether just, today, year the like guess of that? changes on I color this what or balancing a there been those that's your maybe guys within balancing real half estate or of of And areas, think you loan just like kind it's different like kind anything with seems credit guys about customer And things? big few diverse you in this from side a guess, some versus deposit growth ground the the like

Vince Delie

I from all, selective pursued we of strategy the thesis think enables us to a first from perspective. diversification the be we more that was that That Well, very the laid credit beginning. out

last As we get Pittsburgh, that you saturation so throughout to fairly were challenging an And And good were a that stay better hit in point to in portfolios we credits. we underwriting number bankers. -- inconsistent more time that well and I position weren't was you portfolio. economic are to we're of did There we had with a that we growth risk broader have And markets And outlier. we while here. frame, in credit grow cover. able of philosophy this in where a And that philosophy around, to we our becomes for range, our more even applying cycles. short quality profile a think think within time We even to I last significantly a the tight change the together gain an quarters and loan it the that the we not great share in time. put have entrenched markets And terms linked grow diversification like it where cycle. competitors I

have sales We management disciplined very a process.

We field. manage look tools have place analytics credit officers we We risk. trends put in We into within at credit to the data the the portfolio. and use

Our pandemic his all and exposures side that analytics if guide had of it going the credit managed exposures. team into sophisticated. hospitality of down use team already those had at you very the is us, kind for look we deals We the and to Gary that with example. of

than less million of in and that and adjustments industry at all we of customers in the we our exiting $XXX slow and in upon you our were look growth going capital up did going have we in the what at our how to go way to to had We the enough manage left and That's that levels, relative looked and a to through trajectory didn't that cycle. sustain risk after lending weren't a We category. for right. just company. based it exposures exposure. to And geographically thresholds on decided was continue We at made looked set capital portfolio kind

at how impact base. at sensitivity happening looking chain how changes manage teams rates and is will going has it very to We margin we portfolios. it commodity customer going impact customers. company of that, is pricing are I sounds we at you the and if to, from EBITDA we're we how look issues, growth we look necessarily basic, other to just at focused We on the We're don't. not think rising look we're our We to in certain and leverage. interest The that And growth managing a on will you and typically rate perspective supply on grow. with side that growth don't what's our pipelines growth mean, portfolios pick great then that that manage opportunities. if but to we management pretty wrap impact what more lend and stick

us up mid we the single-digit end So outcome to and the to high principal I said sustain as portfolio with, in think investment. to is that's growth and achieve our always we've

population substantial We Mid-Atlantic markets the growth focus Southeast. region in particularly cover. in the So see Maryland. that and fairly lot that's we in There's the in a D.C., [ph] the some activity of strategy

just Carolina that Cleveland opportunities on In see had high-growth to the a because that and more but C&I real see private in single, C&I in of how market. also that's we the opportunities lend stay a bases what's irrespective we and that we're there we out principally going bigger on. industrial Anyway, We estate going don't of at equity more can't Pittsburgh but the in we space, have risk. change an I'm manage changes of And great South not sponsor where the equity We I side. more, have Charleston, is looking there follow -- say on. We've lender. opportunities are

have portfolios. out those sold could stay when times risk. we used to earning the sheet assets we even riskier of at on about try the we So balance And that we've portfolios were the concerned

So, very prudently managed.

we able hope grow have I to have in believe confidence just think helpful. that other in we'll and like be all I the I in team was world I cycles. the our

Michael Perito

is. almost guys it. for loan-to-deposit still appreciate cash where still me, of the are earning then expanding assets I your it right enviable where ratio secondly in mean, I your No is we've you Thanks low for seen. is that. this X% and on of position kind just here And

X% deposit starting I to quicker competitive from loans to your cash little some have Some environment, the upward a do the So good longer things mean, I you with but a to deposit, or guys presumably lower guess on be was the I normalize bit you some mean, need I hard term, of -- point can. that and dynamic. so those to right, guys loan obviously, standpoint ROE cash with see deploy it whether earning right? how are that we're think it's think I assets with peers at elsewhere, XX% that uncertain about bonds. are of they But in to mean, profitability much an generate pressure

that of how balance on? guys mean the timing just given about going the of evolution that's sheet everything do I So you think

Vince Delie

Well metrics achieved XX% pretty loan-to-deposit we've substantial at profitability ratio.

in on points depends It's our of banks. really globally. that when certain differentiates harder the of which it much sure depositors. rate tell to at and relying principally us happened peers. commercial from environment will not They're deposits, our many grow consumer much, commercial the I'm what's But on So interest bank you kind solely cycle I

diversification. again we So have

our deposit betas big great And those success And chunk of had a the to growing favorable sits bank. consumer base, in which more the have the We deposits. be we've those in categories bank. tend to

-- out pursue think that. there. put We that's plan to we we continuing strategies I do on So that those

accounts deposit time. gone the significantly fairly technology e-Store, in of we're online investment over number has the that up opening Our

grow not is good be in think in makes banks that is base That's our deposits, right? in what measured. great. we're I has Good which actually favorable scalability bank can a grow So So way. think improved, to them their deposit a segment position consumer I a should

on to know to better principal anything. I funding if results. we don't you really want to So focus add And achieve it a try that's source.

Vince Calabrese

just the the assets. you the quarter would of Yeah. at if look end spot X% cash, add of No, mean I at about earning I it was

a I point reference made XX%. think to Vince

kind was there. of between our So for and lot room ratio, mark XX% of a loan-to-deposit here there's high

de So I and we've deposits, acquisition, like the [indiscernible] generate said, but novo, out of added added, deployment through is just day. the the think wins geography not through getting the then ability run team to with treasury bankers Vince every our we management there short

differentiator that's for think I a us.

long the have accounts, deposit we So that new cash sheet continuing to us for short run. growth benefit on with that and But of run, balance adding helps we the you the in the growth. just benefit not forward the to could the go as fund have what loan today

Vince Delie

dependent wholesale on been fund. never a heavily We've

it, been times for there's but we've that and there a never think are of I cycle when So solely. more need maybe changes

Michael Perito

guys all Great. those spending Thank I time and helpful. appreciate That color. on the was you for

Vince Delie

you. Thank Yeah.

Operator

next The Instructions] Gunther [Operator question is from go D.A. Davidson. Please Russell with ahead.

Russell Gunther

guys. Yeah. good Hey, morning

Vince Delie

Russell. Good morning,

Russell Gunther

follow-up shake bulk by Just do of by conversation. the you the appreciate sort and begin Fed to beta the as time. will an of have where I year. through, end out through-the-cycle of But And the a updated view as that hikes perspective? betas later total the ones interest-bearing your work deposit could from on things their way views a likely on brief

Vince Calabrese

have think remarks prepared No. give we the for kind reference Well, had that. you I feel the in point that of we a

Vince Delie

cycle. haven't we remember I XX% sell the of life

Vince Calabrese

Yeah.

I mean to and you have of come the that year, on mean point from getting suggesting quarter one of the peaks I kind we or and what that's down I the kind who believe, then we're into Russell mean Fed of starts there. to reference So our for end depending guidance

happened Fed betas relative from where the be for moved back manage, all kind kind to the start is and to beta there what of at think I to happens rates So given the relative, come are rates to going to us to the time interesting to. of once what where deposit has down,

is So it and it balance manage our to job effectively.

point think is best point time reference I relative to than good our happened year that. to a last do end even better we'll and to to try our what be have

Russell Gunther

normalized But growth lower shake strong, there. Thank out And beta another are two? really Okay. of the Results think view the quality That's on model where the growth all terms changed over could your FNB. of at year I follow-up of that the a helpful, you as increase conversation. profile for at has thoughts Vince. historically you. in range and just moved and company, asset or of charge-offs sort into your losses appreciate you've markets then next the

Gary Guerrieri

than of past. Russell point cycles some which we've see from expect and standpoint. consistent would a be list. I in – and the that we're gone would underwriting positions some move and in they opportunities them to consistency we've that to the with charge-offs balance you our at diversity the cycle. taken the I were of tell our sheet would this of normalized seen would seeing expect you that of We've seen, to know, I with has and with opportunities amount highest the as a the in positions book philosophy choosing the I high-quality through the credit cycles, Yes. the opportunities lower slightly And that number through charge-offs expect we've lower be quality

Russell Gunther

this single-digit mentioned for that Vince that, a just for change just And a sustainable you back Gary. markets? year markets, the back longer your then a growth getting balance just growth the against given beyond earlier near-term macro me you in growth discussion. one follow-up something Thank the headwinds you high of in trying on to profile is of result outlined loan your that term that – But kind diversification of just the the to growth single-digits. of is some think last even of high into in the mid- is and half

Vince Calabrese

Thank wish you knew for I the that question. I answer.

capital look the more with it's I or consumers, I we think into to going at honestly, think customers economy. – challenging. as year as depending happening how I'm we look be not the a little US next sure on much what's

there kind today, stand for demand like the reading, based report, credit. seeing I'm it looks of other things banks As pent-up on was what all

customer of So think within uncertainty lot base of in. came a just the kind But – the it flood I headed. about there's where we're

that. about within least I'm next more a capital sensing lot So anecdotal. caution sensing, year. investment I'm there's there's the into caution customer at This is a moving lot base more

as saw can issues, there's slight on inventory utilization borrow We've grow. rates, deal shortfall, to puts so inventory little going seen how to the from the really a to capital our a going feel CRE chain base, we that question quite good. But uptick quarters growth a little to trying both is look first is growth We particularly that bit. a had results think drive great and a chain some the be So borrowing. look having environment right extra so of They're are pipelines whether They're perspective. with issues, bit. benefit for that's if and continue supply commercial to for frankly, starting what's move customers forward, C&I bit my confidence. little that on hand to a they to a fund because within in say those did going we be on it a lid Confidence customers at companies. But they're the they're The happen some of we in slightly that's expectation quite from the customers would I'm trying about – supply two the customer going then lower to investment. of

So they're trying to manage that.

because commodity has of some pricing up gone cost revolver little materials for of the bit dramatically a industries. see pretty raw pushed most You it the up

helps. hope big based it manage later that think – then question come a is will we But All group-by-group. we collectively. kind little I flood -- sincerely, to credit-by-credit, demand year we're should year loans, a it in and for I loans of how into manage saw next the I quickly think going come just tail the bit That's upon off we mark particular commercial in in play. feeling that's we of

to list and there We prospect be for we try just falling have and clients. activity a the

the comes when capital opportunity and So we're only up considered delivered. that

hope helps. So that

Russell Gunther

bit. you, and does taking Vince quite all Thank It my thank a you questions. Yes. for

Vince Calabrese

Thanks.

Vince Delie

Thanks, Russell.

Operator

from from Brian Please question Martin is next ahead. The go Janney.

Brian Martin

good morning, guys. Hey,

Vince Calabrese

Hi, Brian.

Vince Delie

Good morning.

Brian Martin

sounds pipeline. little commercial earlier said maybe down commercial you thought but more. can now down maybe maybe And I you bit. the mentioned you touched touch your a you bit little the a I and like are bit comments, little missed just know just on Vince pipelines -- consumer it in about were just guess I a It the I

or you're I kind know that's Gary there. Vince, if but of seeing what just So don't

Vince Delie

Well, enormous went the funding commercial that pipeline we just through an session.

aren't principal when growth seasonal were had than a at They're year-over-year the few to fill look We which converts considering pipeline of slightly. it on low the the then than areas. But happening lower assets XX So pipeline up look pipelines XX long-term starts we've they on quarter balance segments. with at historically. the at back in you what Within really days two and is the the is our it beginning to sheet close mostly greater ends basis days up again. and

just big There's clear. XX-day be the cleared opportunities It's the that within me you've let So still pipeline. out funding. bucket

Brian Martin

Right.

Vince Delie

return end-to-end the not pipeline. actually total the It's pipeline slightly for That's up commercial.

Brian Martin

Yes. it. Got

a thought the over you just us then next given remind and the to maybe seeing thinking of but about of out what's and here rate repricing? have sensitivity there increases not And the Okay. so. outlook kind kind just just the you of just understanding just here just you're margin of -- sensitivity or about Just margin quarter bit the near-term floors much can the I that just on pipeline, how kind betas there talk talked about the kind we're little the was

Vince Calabrese

mean say, I has guidance cash higher. margin We on Yes. all the lot margins I of gave and levels moving would it's a parts. tone.

we are net mean, So really I million the money are floors income The really of the most for talk of $XXX dollars helpful. under think something interest insignificant. I even not it's about.

If balance you deployed XX Brian look that's and sheet that on still points drivers will margin that. remember the cash go at we to away. get I of on the quarter that there in excess some quantifies we the drag XX the mean continues that have key basis have basis that point a a that second slide cash

point helps and level. basis respectively point is the one accounting count benefits three price stay other PPP and purchase that way. going zero the around PPP at will that probably or very and low this So directionally again, the They're percentage

sure. So is goes that drag point percentage basis away for XX the to benefit

points. XXX key to other are XX points a kind basis XX month drivers XX we've about Some is XX putting of we're of consumer of And CDs kind CDs maturing XX XXX from the in the past month about points. June to the talked we where basis around the that of today basis on

there. dynamic that So

the on June in were XX. December at ended at and look you the April XX points of to at If end the XX CDs basis portfolio we bottom rate

guess last during is was made house just to still virtual it side bit and comment definitely XXX So that we've adjustments loans move at second kind Those given I quarter. last very little started quarter then municipal of XXX rate, and on very, of the bottomed a And new up there. made the I the came piece quarter. that a at growing out low would second but

nice a rate. above it's all the portfolio up. also that's move And So

some So I comment the key of drivers kind on. of would other

Brian Martin

you. Got

two fee kind guess of house. just that just activity. mean, I the are just talked outlook. the the just maybe is this acquisitions, the just just kind of opportunities with And helpful. about greatest kind you maybe can You activity mortgage side kind that's on talk No the kind look floor last one the here and you Maybe the seeing? level kind is then income just Okay. the quarter's of at this and when a you're the of origination of refinance level trends where about of given I of where sustainable

Vince Calabrese

up the were million on truncated business down I of obviously first of so but just $X.X $X.X The so much. comments. the up mortgage million, number a by moved side, affected recovery the quarter. say down level couple underlying from absolute rates MSR million, guess, $X.X by kind I mortgage haven't was valuation would the We

to look a mean, our just here. kind more you four-handle quarters, next all number I into of six-ish the that as That's that has given to activity couple number it guidance. As a coming of down baked into expected guidance our

overall mean, fee the would as income biggest far I capital As categories, markets I is our opportunity say.

Vince Delie

very trying is mean, rate mentioned the think in doing clients derivatives lower, some future of wins for great slowing doing we've capital Capital They've international in offset and the granular platform while fee bought markets comp. I for while. stuff There's interest syndication, coming – well capital particularly as in the us I debt some should businesses provide are have got markets income that to the the banking. fairly created set we been the hedge risk. them. pipeline we Absolutely, markets, help a I

there we So And activity very throughout done little the be that better management came And expect, well. in derivatives to interest rate has expected. the I category. a year than would

Vince Calabrese

that. building really been has Interchange

Vince Delie

moved Interchange up. Yeah. actually

fees growth, most guess us fee growing the If back, you of traditional for not it's closer that on Its rolling look service at I categories. fees the not levels. those with service it's overdrafts interchange

Brian Martin

to go – ahead. was going I Yeah, ask

Vince Delie

I'm sorry.

Brian Martin

to was go really the number level, gave that kind of a say you I interchange interchange you kind the sustainable given sustainable No, management growth. going just and breakdown level kind a number on should treasury This driving forward. the and was just that the as be of of

Vince Delie

consistent are in revenue Those Yeah. stream. reoccurring

Brian Martin

Yeah.

Vince Delie

business win an it's and additive and annuity business, as there. business I Its so. TM that we to grow Particularly, continue the mean,

Vince Calabrese

seasonal. Interchange component is

Vince Delie

Interchangeable but not, right? there is is piece other seasonal, the

Vince Calabrese

sales has Brian just comment is our The it, on slide. organic cost on continue I get into year. other trust there, to too, that's year in under and side valuations, this occurring would record build that I management. income And have quarter mean, next just underneath, on But will market the assets management the thing, at activity help in the looking wealth into impacts we business. and of later

been success. area, another mega having some we've where that's So

Brian Martin

you. Got

Okay. I appreciate all taking for the help Thanks guys. the question.

Vince Delie

you. Thank

Operator

Delie gentlemen, any for our and back conference closing to Ladies I like turn concludes session. over this question-and-answer the to would remarks. Vince

Vince Delie

you. I everybody us I giving Thank it employees Thank time like and questions. to Great for again people that the the our and like mean prepared attention would said thank I those to again. also it. questions. you in participated. asking thank I'd time comments. great meant our step-up I

of the the quality year, that can So cycle and we of throughout confident, I really rest appreciate throughout do because the this very the and effort, I'm well people have. of the we

So thank you. Have a care. Take great day.

Operator

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

disconnect. now may You

F.N.B. (FNB) 21 Jul 222022 Q2 Earnings call transcript