FNB CORP/PA/ Q1 FY2025 earnings call

• F.N.B. reported net income available to common shareholders of $116.5 million or $0.32 per share.
• Total revenue of $411.2 million was driven by net interest income growth and solid non-interest income. Non-interest income totaled $87.8 million, benefiting from strategic investments in high-value business units.
• Acquired a boutique investment banking firm focused on financial advisory services for public and private companies.
• Annualized loan growth was 3.5% and deposit growth was 1.4% in the first quarter, demonstrating growth in client relationships.
• Launched automated direct deposit switch capabilities to enhance the digital banking experience.
• Emphasized robust credit monitoring, capital management, and risk management practices, including regular stress testing.

F.N.B. reported total revenue of $411.2 million in the first quarter. Net interest income contributed to growth, with total net interest income totaling nearly $324 million, the high end of the guidance range. Non-interest income was $87.8 million. Annualized loan growth was 3.5% and deposit growth was 1.4%. Tangible book value per share grew 12% to $10.83, with CET1 capital ratio at 10.7% and tangible common equity to tangible assets at 8.4%.

• Full year balance sheet guidance: loans projected to grow mid-single-digits, deposits also mid-single-digits on a year-over-year spot basis.
• Net interest income full year guide: $1.345 billion to $1.385 billion, factoring in 25 basis point rate cuts in June and September. Second quarter net interest income guidance: $325 million to $335 million.
• Non-interest income full year guide: $350 million to $370 million. Second quarter non-interest income guidance: $85 million to $90 million.
• Non-interest expense full year guide: $965 million to $985 million. Second quarter non-interest expense guidance: $235 million to $245 million.
• Provisions guidance: $85 million to $105 million, dependent on net loan growth and charge-off activity.
• Effective tax rate: 21% to 22%, not assuming investment tax credit activity.

• Uncertainty surrounding tariff impacts on the loan portfolio, with ongoing monitoring of potential risks.
• Volatile macroeconomic environment and fluidity of trade negotiations creating uncertainty in financial projections.
• Potential impact of a recession on reserves, though stress testing indicates manageable builds.

Q: Remind on NII outlook and swap maturities?

A: Vince Calabrese discussed the NII guide, noting swap maturities impact with $8 million drag in Q1, $6 million in Q2, and decreasing thereafter. The second quarter NII is expected to be in the upper half of the range.

Q: Loan growth risk and credit impact of tariffs?

A: Vince Delie and Vince Calabrese talked about the loan pipeline being softer year-over-year, but short-term pipeline building. Gary Guerrieri discussed less than 5% of C&I and owner-occupied loan portfolio at risk from direct tariffs, with frequent communication with clients in at-risk categories.

Q: Expense guidance and loan growth impact?

A: Vince Calabrese explained that Q2 expense guidance is reflective of seasonal expenses, and expenses would flex down if revenues are lower, with $15 million to $20 million cost savings baked into the guidance.

Q: Fee income outlook and deposit dynamics?

A: Vince Delie discussed various fee income contributors including wealth management, capital markets, mortgage, treasury management, and international banking, highlighting a balanced pool of high-value products. On deposits, Vince Calabrese noted deposit cost reduction and dynamics of CD maturities and investment portfolio repricing.

Q: Loan growth in CRE and tariffs?

A: Gary Guerrieri mentioned non-owner CRE portfolio credit metrics improvement, with $283 million reduction in the quarter, and Vince Delie discussed minimal exposure to tariff-impacted retail sectors in the Virginia/D.C. area.

Q: Raptor Partners acquisition and FinTech impact?

A: Vince Delie discussed the acquisition of Raptor Partners as aligning with the strategy to expand capabilities, and Chris from the company discussed the FinTech investment and its role in driving account primacy through eliminating barriers to becoming the primary bank.