F.N.B. Corporation Reports Significant Revenue Growth and Record 2015 Net Income

PITTSBURGH, Jan. 21, 2016 /PRNewswire/ -- F.N.B. Corporation (NYSE: FNB) today reported results for the fourth quarter and full year of 2015.  Net income available to common shareholders for the fourth quarter of 2015 totaled $37.1 million or $0.21 per diluted common share.  Comparatively, third quarter of 2015 net income totaled $38.0 million, or $0.22 per diluted common share, and fourth quarter of 2014 net income totaled $37.3 million or $0.21 per diluted common share.  Net income available to common shareholders for the full year of 2015 totaled $151.6 million, or $0.86 per diluted common share, compared to net income of $135.7 million, or $0.80 per diluted common share in 2014.  Operating results are presented in the tables below.

Vincent J. Delie, Jr., President and Chief Executive Officer, commented, "We are pleased with this quarter's results and another tremendous year.  We were able to achieve record operating net income of $154 million, full-year operating earnings per share growth of 9% and significant revenue growth of 8% with strong contributions from our fee-based businesses.  Through excellent teamwork from our employees, we delivered outstanding performance in 2015, led by continued growth in loans and low-cost deposits, solid asset quality and further improvement in the efficiency ratio.  As we enter 2016, we are well-positioned to realize the benefits of our added scale to continue generating positive operating leverage.  I am confident in our team's ability to execute our strategy and deliver long-term success for our employees, customers and shareholders."

Fourth Quarter 2015 Highlights
(All comparisons to the prior quarter, except as noted; Organic growth in loans and deposits refers to growth excluding the benefit of initial balances acquired via an acquisition.)

• Organic growth in total average loans was $250 million, or 8.4% annualized, with average commercial loan growth of $174 million, or 10.5% annualized, and average consumer loan growth of $79 million, or 6.1% annualized.
• On an organic basis, average total deposits and customer repurchase agreements grew $284 million, or 8.8% annualized.  Average transaction deposits and customer repurchase agreements grew organically $360 million, or 14.0% annualized.
• The net interest margin was stable at 3.38%, compared to 3.39% in the prior quarter.
• The efficiency ratio was 56.3%, compared to 55.6% in the prior quarter and 56.1% in the year-ago quarter.
• Credit quality results reflect consistent non-performing loan and delinquency levels.  For the originated portfolio, non-performing loans and other real estate owned (OREO) to total loans and OREO was 0.99%, the same as the prior quarter, and total originated delinquency increased 4 basis points to 0.93% at December 31, 2015.  Net originated charge-offs were 0.25% annualized of total average originated loans, compared to 0.22% annualized in third quarter of 2015 and 0.17% annualized in the year-ago quarter.
• The tangible common equity to tangible assets ratio was 6.71% at December 31, 2015.  The tangible book value per share increased $0.02 to $6.38 at December 31, 2015.       

Fourth Quarter 2015 Results – Comparison to Prior Quarter
(All comparisons refer to the third quarter of 2015, except as noted; Organic growth in loans and deposits refers to growth excluding the benefit of initial balances acquired via an acquisition.)

Results include the impact from the acquisition of five Bank of America branches (BofA) on September 18, 2015.

Net Interest Income/Loans/Deposits
Net interest income on a fully taxable equivalent basis (FTE) totaled $129.4 million, increasing $2.3 million, or 1.8%, reflecting average earning asset growth of $296 million, or 7.9% annualized, and a higher benefit from accretable yield adjustments.  The net interest margin was 3.38%, compared to 3.39% in the prior quarter.  During the fourth quarter, the core net interest margin was reduced by 3 basis points from the issuance of $100 million in subordinated debt on October 2, 2015, which was issued for general corporate purposes and, among other reasons, to support growth of our principal subsidiary and its businesses.  Excluding accretable yield adjustments and the impact of the subordinated debt issuance, the core net interest margin would have remained stable at 3.38%.

Average loans totaled $12.0 billion and increased $251 million, or 8.5% annualized.  Organic growth in average commercial loans totaled $174 million, or 10.5% annualized, and growth in average consumer loans was $79 million or 6.1% annualized.  Total commercial loan growth was led by strong production from the metropolitan markets of Pittsburgh, Cleveland and Baltimore and total consumer growth was led by nearly equal contributions from the residential, indirect and home equity-related loan portfolios.

Average deposits and customer repurchase agreements totaled $13.1 billion and increased $409 million, or 12.8% annualized, and included average organic growth of $284 million or 8.8% annualized.  Consistent with prior quarters, growth in transaction deposits and customer repurchase agreements was partially offset by a decline in time deposits.  On an organic basis, average total transaction deposits and customer repurchase agreements increased $360 million or 14.0% annualized.  Organic growth in average non-interest bearing deposits was $104 million or 14.2% annualized, primarily reflecting growth in non-interest bearing business accounts and money market balances.  Total loans as a percentage of deposits and customer repurchase agreements was 95% at December 31, 2015.

Non-Interest Income
Non-interest income totaled $43.1 million, increasing $1.8 million or 4.3%.  Non-interest income was a record high for the quarter, with continued positive results in service charges, wealth management, mortgage banking and capital markets.  Non-interest income represented 25% of total revenue.

Non-Interest Expense
Non-interest expense totaled $101.2 million, increasing $3.1 million, or 3.2%, and included $1.4 million of merger costs, compared to $1.3 million of merger costs in the third quarter.  The increase in non-interest expense was primarily due to seasonally higher marketing expense and higher outside professional services.  The efficiency ratio was 56.3%, compared to 55.6% in the third quarter of 2015.

Credit Quality
Credit quality metrics were generally consistent and the ratio of non-performing loans and OREO to total loans and OREO increased slightly by 1 basis point to 0.91% at December 31, 2015, and was consistent with the third quarter at 0.99% for the originated portfolio.  Delinquency, defined as total originated past due and non-accrual loans as a percentage of total originated loans, increased 4 basis points to 0.93% at December 31, 2015.

Net charge-offs for the fourth quarter totaled $6.8 million, or 0.23% annualized of total average loans, compared to $5.7 million, or 0.19% annualized, in the prior quarter.  For the originated portfolio, net charge-offs as a percentage of average originated loans were 0.25% annualized, compared to 0.22% annualized in the prior quarter.  For the originated portfolio, the allowance for loan losses to total originated loans was 1.23%, compared to 1.22% at September 30, 2015, with the slight increase directionally consistent with the quarter's credit quality performance.  The ratio of the allowance for loan losses to total loans increased slightly to 1.16%, compared to 1.15%.  The provision for loan losses increased $1.9 million to $12.7 million, attributable to strong originated loan growth and slight credit migration during the quarter.  The ratio of the originated allowance for loan losses to originated non-performing loans decreased to 190.6%, compared to 194.5% September 30, 2015.

Full Year 2015 Results – Comparison to Prior Year
(All comparisons refer to full year 2014, except as noted; Organic growth in loans and deposits refers to growth excluding the benefit of initial balances acquired via acquisitions.)

Results include the impact from the acquisition of five Bank of America branches (BofA) on September 18, 2015, the OBA Financial Services, Inc. (OBAF) acquisition on September 19, 2014, and the BCSB Bancorp, Inc. (BCSB) acquisition on February 15, 2014.

Net Interest Income/Loans/Deposits
Net interest income on a FTE basis totaled $505.9 million, increasing $32.7 million or 6.9%. The net interest margin was 3.42%, compared to 3.59%.  Excluding accretable yield adjustments, the 2015 net interest margin would have been 3.39%, compared to 3.54%, reflecting the extended low interest rate and competitive environment.  Average earning assets grew $1.6 billion, or 12.4%, through consistent organic loan growth and the benefit of a full year of BCSB and OBAF.

Average loans totaled $11.7 billion and increased $1.3 billion, or 12.4%, reflecting strong organic average loan growth of $1.0 billion, or 9.7%, and the benefit from a full year of the acquired balances.  Growth in the commercial portfolio continued throughout 2015, with average balances growing organically $518 million or 8.6%.  Average organic consumer loan growth was $517 million or 11.4%.  Organic growth results reflect the benefit of the increased number of prospects from an expanded footprint.

Total average deposits and customer repurchase agreements totaled $12.7 billion and increased $805 million or 6.8%, including average organic growth of $477 million or 3.9%. Organic growth in low-cost transaction deposit accounts and customer repurchase agreements was $691 million, or 7.4%, and was largely driven by organic growth in average non-interest bearing deposits of $329 million or 13.2%.

Non-Interest Income
Non-interest income totaled $162.4 million, increasing $4.1 million, or 2.6%, with 2014 including higher gains on the sale of securities of $10.9 million.  Excluding securities gains and a non-recurring gain in 2014, total non-interest income would have increased $17.7 million, or 12.3%.  Wealth management revenue (trust income and securities commissions) increased $3.8 million, or 12.2%, reflecting positive organic growth results and incremental lift from the Cleveland and Maryland markets.  Mortgage banking revenues increased $4.9 million to $8.6 million, representing the benefits from investments made during 2014 to increase the scale of this line of business.  Increased capital markets revenue reflect increased swap revenue driven by higher volumes and successful cross-selling efforts for syndications and international banking products and services.  Total non-interest income was 24% of total revenue.   

Non-Interest Expense
Non-interest expense totaled $390.5 million, increasing $11.3 million, or 3.0%, and included merger and severance costs of $3.0 million, compared to $12.2 million in 2014.  Absent these merger and severance costs, non-interest expense would have increased $20.4 million, or 5.6%, primarily attributable to the additional operating costs related to the expanded operations from BCSB, OBAF and the BofA branch acquisition.  The efficiency ratio improved to 56.1% from 57.2%.

Credit Quality
Credit quality results reflect improvement over the prior year.  The ratio of non-performing loans and OREO to total loans and OREO improved 6 basis points to 0.91%, and for the originated portfolio, the ratio of non-performing loans and OREO to total loans and OREO improved 14 basis points to 0.99%.  Total originated delinquency, defined as total past due and non-accrual originated loans as a percentage of total originated loans, improved 6 basis points to 0.93% at December 31, 2015.

Net charge-offs totaled $24.4 million, or 0.21% annualized of total average loans, compared to $23.5 million, or 0.23% annualized.  For the originated portfolio, net charge-offs were $24.2 million, or 0.23% annualized of total average originated loans, compared to $21.0, million or 0.24% annualized.  The ratio of the allowance for loan losses to total originated loans was 1.23% at December 31, 2015, compared to 1.22% at December 31, 2014.  The provision for loan losses totaled $40.4 million, compared to $38.6 million in the prior-year period, and is attributable to strong organic loan growth and slight credit migration.

Capital Position
The tangible common equity to tangible assets ratio (non-GAAP measure) was 6.71%, compared to 6.98% and 6.83% at September 30, 2015 and December 31, 2014, respectively.  The tangible book value per common share (non-GAAP measure) increased to $6.38, from $6.36 and $5.99 at September 30, 2015 and December 31, 2014, respectively.  The common dividend payout ratio for the full year of 2015 was 55.7%.

Conference Call
F.N.B. Corporation will host a conference call to discuss financial results for the fourth quarter and full year of 2015 on Thursday, January 21, 2016, at 10:30 a.m. Eastern Time. Participating callers may access the call by dialing (866) 652-5200 or (412) 317-6060 for international callers. Participants should ask to be joined into the F.N.B. Corporation call. The Webcast and presentation materials may be accessed through the "About Us - Investor Relations & Shareholder Services" section of the Corporation's Web site at www.fnbcorporation.com.

A replay of the call will be available shortly after the completion of the call until midnight ET on Thursday, January 28, 2016. The replay can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the conference replay access code is 10077464. Following the call, a transcript and the related presentation materials will be posted to the "About Us - Investor Relations & Shareholder Services" section of F.N.B. Corporation's web site at www.fnbcorporation.com.

About F.N.B. Corporation
F.N.B. Corporation (NYSE: FNB), headquartered in Pittsburgh, Pennsylvania, is a diversified financial services company operating in six states, including three major metropolitan areas. It holds a top retail deposit market share in Pittsburgh, PA, Baltimore, MD, and Cleveland, OH. F.N.B. has total pro-forma assets (with the proposed merger of Metro Bancorp, Inc.) of $20.6 billion and more than 300 banking offices throughout Pennsylvania, Maryland, Ohio and West Virginia. F.N.B. provides a full range of commercial banking, consumer banking and wealth management solutions through its subsidiary network, which is led by its largest affiliate, First National Bank of Pennsylvania, founded in 1864. Commercial banking solutions include corporate banking, small business banking, investment real estate financing, international banking, business credit, capital markets and lease financing. The consumer banking segment provides a full line of consumer banking products and services including deposit products, mortgage lending, consumer lending and a complete suite of mobile and online banking services. F.N.B.'s wealth management services include asset management, private banking and insurance. F.N.B. also operates Regency Finance Company, which has more than 70 consumer finance offices in Pennsylvania, Ohio, Kentucky and Tennessee. The common stock of F.N.B. Corporation trades on the New York Stock Exchange under the symbol "FNB" and is included in Standard & Poor's SmallCap 600 Index with the Global Industry Classification Standard (GICS) Regional Banks Sub-Industry Index. Customers, shareholders and investors can learn more about this regional financial institution by visiting the F.N.B. Corporation web site at www.fnbcorporation.com.

Non-GAAP Financial Measures
F.N.B. Corporation uses certain non-GAAP financial measures, such as operating net income available to common shareholders, operating diluted earnings per common share, net interest income on a fully taxable equivalent basis (FTE), core net interest margin, tangible book value per common share and the ratio of tangible common equity to tangible assets, to provide information useful to investors in understanding F.N.B. Corporation's operating performance and trends, and to facilitate comparisons with the performance of F.N.B. Corporation's peers. The non-GAAP financial measures used by F.N.B. Corporation may differ from the non-GAAP financial measures other financial institutions use to measure their results of operations.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, F.N.B. Corporation's reported results prepared in accordance with U.S. GAAP.  Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures are included in the tables at the end of this release under the caption "Non-GAAP Financial Measures."

Cautionary Statement Regarding Forward-looking Information
We make statements in this press release and the related conference call, and may from time to time make other statements, regarding our outlook for earnings, revenues, expenses, capital levels, liquidity levels, asset levels, asset quality and other matters regarding or affecting F.N.B. Corporation and its future business and operations that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "see," "look," "intend," "outlook," "project," "forecast," "estimate," "goal," "will," "should" and other similar words and expressions.  Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. 

Forward-looking statements speak only as of the date made.  We do not assume any duty and do not undertake to update forward-looking statements.  Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance.

Our forward-looking statements are subject to the following principal risks and uncertainties:

• Our businesses, financial results and balance sheet values are affected by business and economic conditions, including the following:
  • Changes in interest rates and valuations in debt, equity and other financial markets.
  • Disruptions in the liquidity and other functioning of U.S. and global financial markets.
  • The impact of federal regulatory agencies that have oversight or review of F.N.B. Corporation's business and securities activities, including the bank regulatory examination and supervisory process.
  • Actions by the Federal Reserve, U.S. Treasury and other government agencies, including those that impact money supply and market interest rates.
  • Slowing or reversal of the rate of growth in the economy and employment levels and other economic factors that affect our liquidity and the performance of our loan portfolio, particularly in the markets in which we operate.
  • Changes in customer preferences and behavior, whether due to changing business and economic conditions, legislative and regulatory initiatives, or other factors. 
• Legal and regulatory developments could affect our ability to operate our businesses, financial condition, results of operations, competitive position, reputation, or pursuit of attractive acquisition opportunities.  Reputational impacts could affect matters such as business generation and retention, liquidity, funding, and ability to attract and retain management.  These developments could include:
  • Changes resulting from legislative and regulatory reforms, including broad-based restructuring of financial industry regulation; changes to laws and regulations involving tax, pension, bankruptcy, consumer protection, and other industry aspects; and changes in accounting policies and principles.  We will continue to be impacted by extensive reforms provided for in the Dodd-Frank Wall Street Reform and Consumer Protection Act and otherwise growing out of the recent financial crisis, the precise nature, extent and timing of which, and their impact on us, remains uncertain. 
  • Results of the regulatory examination and supervisory process.
  • Changes to regulations governing bank capital and liquidity standards, including the Dodd-Frank Act, Volcker rule, Dodd-Frank stress testing rules (DFAST) and Basel III initiatives. 
  • Impact on business and operating results of any costs associated with obtaining rights in intellectual property, the adequacy of our intellectual property protection in general and our operational or security systems or infrastructure, or those of third-party vendors or other service providers, and rapid technological developments and changes.
• Business and operating results are affected by judgments and assumptions in our analytical and forecasting models, our reliance on the advice of experienced outside advisors and our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of third-party insurance, derivatives, swaps, and capital management techniques, and to meet evolving regulatory capital standards.
• As demonstrated by our acquisitions, we grow our business in part by acquiring, from time to time, other financial services companies, financial services assets and related deposits.  These acquisitions often present risks and uncertainties, including, the possibility that the transaction cannot be consummated; regulatory issues; cost or difficulties involved in integration and conversion of the acquired businesses after closing; inability to realize expected cost savings, efficiencies and strategic advantages; the extent of credit losses in acquired loan portfolios; the extent of deposit attrition; and the potential dilutive effect to our current shareholders.
• Competition can have an impact on customer acquisition, growth and retention and on credit spreads and product pricing, which can affect market share, deposits and revenues.  Industry restructuring in the current environment could also impact our business and financial performance through changes in counterparty creditworthiness and performance, and the competitive and regulatory landscape.  Our ability to anticipate and respond to technological changes can also impact our ability to respond to customer needs and meet competitive demands.
• Business and operating results can also be affected by widespread disasters, dislocations, terrorist activities, cyber-attacks or international hostilities through their impacts on the economy and financial markets.

We provide greater detail regarding these and other factors in our 2014 Form 10-K, including the Risk Factors section of that report, and our subsequent SEC filings.  Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release or in SEC filings, accessible on the SEC's website at www.sec.gov and on our corporate website at www.fnbcorporation.com.  We have included these web addresses as inactive textual references only.  Information on these websites is not part of this document.

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SOURCE F.N.B. Corporation

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