F.N.B. Corporation (NYSE:FNB) Q3 2016 Earnings Conference Call - Final Transcript

Oct 20, 2016 • 10:30 am ET

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F.N.B. Corporation (NYSE:FNB) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and welcome to the F.N.B. Corporation's Third Quarter 2016 Quarterly Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions].

I would now like to turn the conference over to Matthew Lazzaro, Investor Relations. Mr. Lazzaro, please go ahead.

Executive
Matthew Lazzaro

Thank you. Good morning, everyone and welcome to our earnings call. This conference call of F.N.B. Corporation and the reports it files with the Securities and Exchange Commission often contains forward-looking statement. Please refer to the forward-looking statement disclosure contained in our earnings release, related presentation materials and our reports and registration statement filed with the Securities and Exchange Commission available on our corporate website. A replay of this call will be available until October 27th and a transcript and the webcast link we posted to the About Us, Investor Relations and Shareholder Services section of our corporate website.

I will now turn the call over to Vince Delie, President and Chief Executive Officer.

Executive
Vince Delie

Welcome to our conference call to discuss our third quarter results. Joining me today is Vince Calabrese, our Chief Financial Officer, and Gary Guerrieri, our Chief Credit Officer.

We are very pleased to share the results of another record-setting quarter for F.N.B. as EPS grew 9% to $0.24 per share and net income exceeded $50 million for the first time, driven largely by record revenue of $213 million. We also continued our streak of 29 consecutive quarters of organic loan growth and 15 quarters of total revenue growth. Third quarter revenue was supported by continued growth in our fee-based businesses, notably capital markets, mortgage banking, wealth management and insurance. The quarter's efficiency ratio of 54%, reflects benefit of increased revenue, continued diligent expense management, and the full realization of the targeted cost savings from the Metro and Fifth Third branch acquisitions. Return on average tangible common equity and return on average tangible assets on an operating basis also improved from the prior quarter, to 15% and 1.1%, respectively.

Looking at the income statement, non-interest income was a record high at $53 million, representing a 29% increase from the year-ago quarter. This success is largely attributable to the performance of our fee based business units. Our bankers engage in a planning process that involves identifying products that fulfill a client needs, and are committed to providing high-value fee-income services, with the best interests of our clients in mind. This approach enables our customers to most effectively manage their banking relationships and fully utilize our diverse product set as specific needs arise.

I'll note that in regard to the expected Yadkin acquisition, we conservatively modeled limited revenue synergies and utilized the current interest rate environment for five years, thus providing FNB with an opportunity to outperform the financial model and drive additional shareholder value creation.

Looking at the balance sheet on an organic linked-quarter basis, annualized average total loan growth was 8%, driven primarily by the consumer segment. Organic growth in the consumer loan portfolio was a combined 13% annualized,