F.N.B. Corporation (NYSE:FNB) Q3 2017 Earnings Conference Call Transcript

Oct 19, 2017 • 10:30 am ET


F.N.B. Corporation (NYSE:FNB) Q3 2017 Earnings Conference Call Transcript


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Vince Delie

part of this strategy involves the use of data analytics.

As we mentioned on the July call, over the past several years, we have invested substantial resources in data governance and analytics, providing us a unique ability to leverage our own information. These enhanced analytics have equipped our bankers with the tools to better identify a match between value-added services and client needs. We continue to make progress in the use of these tools to drive customer interaction.

In the past two months, we've produced well over 1 million product leads from within our customer base using our own proprietary algorithm. Our bankers contacted nearly 200,000 customers so far with a response rate that was nearly three times greater than our previous marketing efforts. In fact, one in five calls has resulted in a sales opportunity or an appointment for a follow-up discussion.

We continue to refresh our models monthly and provide leads to the field, as well as incorporating the leads into our various marketing programs. Our data science and marketing teams will continue to explore new methods of identifying opportunities, as well as refine existing ones in pursuit of finding the right solution to help our customers achieve their goals. Let me remind you that these investments in technology, data analytics and marketing are largely reflected in our current expense run rate.

Returning to our financial performance. Fee-based businesses, including wealth management, insurance and mortgage saw combined 6% increase in revenue compared to the prior quarter. I'm confident that we can continue to build on that momentum across the footprint. While we were pleased with the early results of our wealth and insurance strategic initiatives, certain fee-based businesses are taking slightly longer than originally anticipated to deliver the expected earnings contributions.

After a very strong level of activity in the previous quarter, capital markets revenue of $2.8 million came in lighter than our expectations. Given the nature of that product set, which includes syndications, international and swap fees, the revenue can vary somewhat quarter-to-quarter.

However, the pipelines for these products remain strong, our product specialists are in place, commercial bankers have been trained and compensation plans are aligned. We remain optimistic that this revenue source will continue to grow and become a larger contributor to our fee-based income in the fourth quarter and on an ongoing basis.

Looking at the SBA business, as you know, we changed this business from a volume-driven national model to a more regional footprint and relationship-based model. Over the last few quarters, we've rounded out the origination team and started to gain transaction growth. Although not yet performing in line with our original expectations through the first part of 2017, we fully expect SBA to generate more revenue moving forward. On a positive note, we did see a 7% increase in revenue from SBA on a linked-quarter basis and the pipeline continues to build.

Turning to the mortgage banking business, even though revenue was up 5% this quarter, it has performed below our