F.N.B. Corporation (NYSE:FNB) Q1 2018 Earnings Conference Call - Preliminary Transcript
Apr 24, 2018 • 10:30 am ET
Ladies and gentlemen, at this time, we'll begin the question-and-answer session. (Operator Instructions) And our first question today comes from Frank Schiraldi from Sandler O'Neil. Please go ahead with your question.
Good morning, Frank.
Jut starting with the NIM, just wondering if you can give a little more color there in terms of expectations for what you could pick up there, as you get the reversal of the seasonality in the first quarter? And also just with the focus on deposit growth here and obviously, the idea that we're seeing some rising deposit costs in the industry, if you still think you can get a net NIM benefit from -- given an additional rate hike here going forward?
Sure. Thanks, Frank. I guess a few things. Let me just comment on net interest income for the quarter. A couple of things are important to keep in mind when you're looking at net interest income kind of fourth to first. I'll just kind of walk through that and I'll get to your questions, too, as I'm going through it.
So for the quarter, we were down $3.9 million. The key drivers there two less days alone is worth $3.6 million. So that's important to keep in mind. Excess recoveries, which are lumpy, as we've said in the past, were $4.2 million lower from a very strong result in the fourth quarter. And then the seasonal decline in deposits that I mentioned, resulted in short-term borrowings increasing $434 million and then the entire $4 billion in short-term borrowings gets repriced up 21 basis points to 154. So those are three important things that are affecting the overall level of net-interest income kind of fourth to first.
As far as the margin itself, there's also the FTE adjustment that we talked about, which is just math, again, it doesn't affect net income in dollars in any way. But it is math and we all have a new basis or a new way of calculating that. So I mean, that reduced margin by nearly four basis points.
So kind of as you go forward from the first quarter, I mean, we clearly already started to see the deposits come back in, which happens every year, couple of times a year. You see seasonal outflows in the first quarter and then it starts to build back in the second quarter and it swings from $200 million to $500 million kind of as you go through the year.
So we would expect that to happen in the second quarter. That clearly gives you some benefit, gives you the ability to benefit from the Fed move in March, as we go forward into the second quarter and then the corresponding movements going forward from there. And then -- but lot of it -- the full benefit is going to be a function of the mix of the loans that we're putting on the books and then the success we have in funding it with deposits. And