F.N.B. Corporation (NYSE:FNB) Q3 2017 Earnings Conference Call - Final Transcript
Oct 19, 2017 • 10:30 am ET
designed to attract households and improve product penetration.
Let's look now at non-interest income and expense on Slides 8 and 9. Non-interest income was flat compared to the second quarter, reflecting growth in mortgage banking, insurance and wealth management, offset by lower capital markets activity. Keep in mind, the capital markets activity tends to be driven by fewer larger transactions, and therefore, revenue recognition can vary quite a bit from quarter-to-quarter depending on deal timing. Non-interest income also included about $2.3 million of incremental securities gains that resulted from economically favorable sales of a large number of odd lot, small exposure investment positions.
Turning to non-interest expense, expenses were flat quarter-over-quarter, as lower salaries expense was offset by higher outside services and occupancy expenses. We have demonstrated an ability to tightly control expenses, which is apparent in the improved third quarter efficiency ratio of 53.1%. Regarding income taxes, our overall effective tax rate for the quarter was 29.9%, primarily due to the tax credits generated by commercial lending and leasing opportunities in our new markets. Tax credit relationships have historically been a part of our normal course of business, and we expect to continue to benefit from these activities going forward.
Looking at our operating ratios for the quarter, our return on average assets improved 1 basis point to 1.01% and our return on average tangible common equity improved to 16%. Tangible common equity to tangible assets improved 4 basis points to 6.87% and tangible book value per share grew $0.12 to $6.12 per share.
Looking at near-term expectations, we still expect full-year 2017 bottom line performance to fall within the ranges that were provided in July with some offsetting pluses and minuses in the major line items. As far as next year goes, we plan to provide high-level guidance for full-year 2018 on our fourth quarter earnings call in January.
In summary, this was another positive quarter for FNB in which we made continued progress towards the goals we laid out over the past several earnings calls. We achieved meaningful improvement in efficiency ratio, improved our operating ratios and organically grew loans and deposits. While some of the fee-based businesses have taken longer to reach forecasted levels, we expect the contribution going forward to expand like our experience in other new markets we have entered, and help drive sustainable earnings per share growth.
Now I would like to turn the call over to the operator for questions.