Le Lézard
Classified in: Business, Covid-19 virus
Subject: ERN

F.N.B. Corporation Reports 2020 Earnings per Share of $0.85


PITTSBURGH, Jan. 19, 2021 /PRNewswire/ -- F.N.B. Corporation (NYSE: FNB) reported earnings for the fourth quarter of 2020 with net income available to common stockholders of $70.2 million, or $0.22 per diluted common share. Comparatively, fourth quarter of 2019 net income available to common stockholders totaled $93.2 million, or $0.29 per diluted common share, and third quarter of 2020 net income available to common shareholders totaled $80.8 million, or $0.25 per diluted common share. On an operating basis, the fourth quarter of 2020 earnings per diluted common share (non-GAAP) was $0.28, excluding $0.06 for significant items. Operating earnings per diluted common share (non-GAAP) for the fourth quarter of 2019 was $0.30 and $0.26 for the third quarter of 2020, excluding $0.01 for significant items in each quarter.

For the full year of 2020, net income available to common stockholders was $278.0 million, or $0.85 per diluted common share. Comparatively, full year 2019 net income available to common stockholders totaled $379.2 million, or $1.16 per diluted common share. On an operating basis, full year 2020 earnings per diluted common share (non-GAAP) was $0.96, excluding $0.11 for significant items. Operating earnings per diluted common share (non-GAAP) for the full year of 2019 was $1.18, excluding $0.02 for significant items. The results for 2020 reflect the impact of $45.6 million of significant items, including loss on debt extinguishment and related hedge termination of $25.6 million related to the prepayment of higher-rate Federal Home Loan Bank (FHLB) borrowings given continued strong deposit growth; branch consolidation costs of $18.7 million resulting from our branch optimization efforts and continued customer migration to digital channels; COVID-19 related expenses of $11.3 million, including $2.5 million in contributions to our FNB Foundation to continue to support our communities as they deal with the ongoing pandemic; and service charge refunds of $3.8 million, partially offset by a $13.8 million gain on the sale of all of the Bank's holdings of Visa Class B shares.

"In an unparalleled year for our country and industry, we maintained our commitment to drive long-term shareholder value, keeping our focus on our stated objectives and taking steps to improve efficiency and profitability. These efforts, in addition to continuous investments in our customer experience, serve as the foundation for strong financial performance and progress with fourth quarter 2020 operating earnings per share increasing 8% to $0.28, and operating return on tangible common equity increasing to 15%. Full year total revenue was a record at $1.2 billion amidst a challenging interest rate environment and operating net income available to common stockholders totaled $314 million, or $0.96 per diluted common share, inclusive of credit reserves associated with the COVID-19 pandemic. FNB achieved a record level of total non-interest income, a benefit of our diversified business model, as our investments in key fee-based businesses of capital markets, mortgage banking, insurance, and wealth management served us well in the current environment with these record levels of revenue increasing $32 million, or 24%, to $162 million in the aggregate, compared to 2019.  Our efficiency ratio totaled 56%, and operating expenses were well controlled, achieving our stated 2020 cost-savings target of $20 million. Tangible book value per common share increased 5% compared to 2019 and reached an all-time high of $7.88 in the fourth quarter of 2020", said Vincent J. Delie, Jr., Chairman, President and Chief Executive Officer of F.N.B. Corporation and First National Bank.

"These results are attributed directly to the dedication and determination of our employees who quickly adapted to working from home during the pandemic and maintained exceptional support to our clients as they themselves navigated this difficult climate. As an organization, we will continue to diligently serve all of our constituents as we move forward together and strive for even better results in 2021."

Fourth Quarter 2020 Highlights

(All comparisons refer to the fourth quarter of 2019, except as noted)

Non-GAAP measures referenced in this release are used by management to measure performance in operating the business that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release. For more information regarding our use of non-GAAP measures, please refer the discussion herein under the caption, Use of Non-GAAP Financial Measures and Key Performance Indicators.

Quarterly Results Summary

4Q20


3Q20


4Q19

Reported results






Net income available to common stockholders (millions)

$

70.2



$

80.8



$

93.2


Net income per diluted common share

0.22



0.25



0.29


Book value per common share (period-end)

15.09



14.99



14.70


Pre-provision net revenue (reported) (millions)

103.4



126.9



123.1


Operating results (non-GAAP)






Operating net income available to common stockholders (millions)

$

91.9



$

85.5



$

96.6


Operating net income per diluted common share

0.28



0.26



0.30


Tangible common equity to tangible assets (period-end)

7.24

%


7.19

%


7.58

%

Tangible book value per common share (period-end)

$

7.88



$

7.81



$

7.53


Pre-provision net revenue (operating) (millions)

$

130.9



$

132.9



$

127.4


Average diluted common shares outstanding (thousands)

324,877



325,663



326,516


Significant items impacting earnings1 (millions)






Pre-tax COVID-19 expense

$

(4.7)



$

(2.7)



$

?


After-tax impact of COVID-19 expense

(3.7)



(2.1)



?


Pre-tax gain on sale of Visa class B stock

?



13.8



?


After-tax impact of gain on sale of Visa class B stock

?



10.9



?


Pre-tax loss on FHLB debt extinguishment and related hedge terminations

(12.3)



(13.3)



?


After-tax impact of loss on FHLB debt extinguishment and related hedge terminations

(9.7)



(10.5)



?


Pre-tax branch consolidation costs

(10.5)



?



?


After-tax impact of branch consolidation costs

(8.3)



?



?


Pre-tax service charge refunds

?



(3.8)



(4.3)


After-tax impact of service charge refunds

?



(3.0)



(3.4)


Total significant items pre-tax

$

(27.5)



$

(6.0)



$

(4.3)


Total significant items after-tax

$

(21.7)



$

(4.7)



$

(3.4)








Year-to-Date Results Summary

2020


2019



Reported results






Net income available to common stockholders (millions)

$

278.0



$

379.2




Net income per diluted common share

0.85



1.16




Pre-provision net revenue (reported) (millions)

466.3



515.4




Operating results (non-GAAP)






Operating net income available to common stockholders (millions)

$

314.0



$

386.1




Operating net income per diluted common share

0.96



1.18




Pre-provision net revenue (operating) (millions)

516.0



527.4




Average diluted common shares outstanding (thousands)

325,488



326,061




Significant items impacting earnings1 (millions)






Pre-tax COVID-19 expense

$

(11.3)



$

?




After-tax impact of COVID-19 expense

(8.9)



?




Pre-tax gain on sale of Visa class B stock

13.8



?




After-tax impact of gain on sale of Visa class B stock

10.9



?




Pre-tax loss on FHLB debt extinguishment and related hedge terminations

(25.6)



?




After-tax impact of loss on FHLB debt extinguishment and related hedge terminations

(20.2)



?




Pre-tax branch consolidation costs

(18.7)



(4.5)




After-tax impact of branch consolidation costs

(14.8)



(3.6)




Pre-tax service charge refunds

(3.8)



(4.3)




After-tax impact of service charge refunds

(3.0)



(3.4)




Total significant items pre-tax

$

(45.6)



$

(8.8)




Total significant items after-tax

$

(36.0)



$

(7.0)




(1) Favorable (unfavorable) impact on earnings.

 

Fourth Quarter 2020 Results ? Comparison to Prior-Year Quarter

Net interest income totaled $234.4 million, increasing $8.0 million, or 3.5%, as significant growth in average loans and deposits of $2.4 billion and $4.1 billion, respectively, offset the repricing impact from lower interest rates on earning asset yields. Total average earning assets increased $3.2 billion, or 10.6%, led by average loan growth that included $2.46 billion in PPP average loans for the fourth quarter of 2020.

The net interest margin (FTE) (non-GAAP) declined 20 basis points to 2.87%, as earning asset yields decreased 82 basis points primarily reflecting the impact of significant reductions in the 1-month LIBOR rate on variable-rate loans. Offsetting the lower earning asset yields, the total cost of funds improved 63 basis points to 0.45%, compared to 1.08%, due to a 76 basis point reduction in interest-bearing deposit costs and lower borrowing costs.

Average loans totaled $25.7 billion, an increase of $2.4 billion, or 10.4%, with commercial loan growth increasing $2.9 billion, or 19.9%, including $2.1 billion, or 40.4%, growth in commercial and industrial loans and $0.8 billion, or 8.4%, growth in commercial real estate balances. Excluding PPP loans, origination activity was led by growth in the Cleveland, Mid-Atlantic (Washington D.C., northern Virginia and Maryland markets), South Carolina and Pittsburgh regions. Average consumer loans decreased $499 million, or 5.8%, primarily due to the sale of approximately $500 million of indirect auto installment loans in November 2020. The consumer loan declines were partially offset by growth in direct installment loans of $210 million, or 11.8%, and residential mortgages of $139 million, or 4.2%.

Average deposits totaled $29.0 billion with growth in non-interest-bearing demand deposits of $2.6 billion, or 40.3%, and interest-bearing demand deposits of $2.1 billion, or 18.9%. The growth in deposits was driven by solid organic growth in customer relationships, as well as deposits from PPP funding and government stimulus activities. The loan-to-deposit ratio was 87.4% at December 31, 2020, compared to 94.0% at December 31, 2019.

Strong deposit growth enabled FNB to reduce higher rate FHLB borrowings by $300 million during the fourth quarter of 2020 with a loss on debt extinguishment costs of $12.3 million, which was included in other non-interest income. These balance sheet actions taken to reduce higher-cost debt will provide future benefit through lower interest expense on outstanding borrowings.

Non-interest income totaled $68.4 million, a decrease of $5.7 million, or 7.7%, compared to the fourth quarter of 2019. On an operating basis, non-interest income increased $2.3 million, or 3.0%, when excluding significant items impacting earnings of $12.3 million and $4.3 million from the fourth quarters of 2020 and 2019, respectively. Mortgage banking operations income increased $4.9 million, or 47.0%, as a result of continued strong production levels and meaningful improvement in gain-on-sale margins. Trust services increased $1.1 million, or 14.7%, benefiting from geographic expansion and higher equity market valuations on assets under management. There was also a reduction in FHLB borrowings and the FHLB dividend rate resulting in a $1.1 million, or 22.8%, decrease in dividends on non-marketable equity securities. The termination of $300 million in higher-rate FHLB borrowings resulted in a loss on debt extinguishment of $12.3 million reported in other non-interest income.

Non-interest expense totaled $199.3 million, increasing $22.0 million, or 12.4%. On an operating basis, non-interest expense increased $6.8 million, or 3.8%, when excluding $10.5 million in branch consolidation costs and $4.7 million of COVID-19 related expenses in the fourth quarter of 2020. On an operating basis, salaries and benefits increased $8.8 million, or 9.1%, primarily from higher production-related commissions and incentives and the normal impact from annual merit increases. On an operating basis, occupancy and equipment expense increased $0.2 million, or 0.6%, as benefit from branch rationalization fully offset expansion in key regions such as the Mid-Atlantic and South Carolina and continued digital investment. The efficiency ratio (non-GAAP) equaled 56.5%, compared to 56.0%.

The ratio of non-performing loans, 90 days past due, and other real estate owned (OREO) to total loans and OREO increased 4 basis points to 0.77%. Prior to the adoption of CECL, acquired (purchased credit deteriorated, or PCD) loans were excluded from non-performing disclosures. Total delinquency increased 8 basis points to 1.02%, compared to 0.94% at December 31, 2019, and remains at satisfactory levels. Excluding PPP loans at December 31, 2020, total delinquency increased 17 basis points to 1.11%, still at satisfactory levels. The total level of loans on temporary deferral is 1.7% as of December 31, 2020, compared to 3.4% at September 30, 2020, and 10.3% at June 30, 2020.

The provision for credit losses totaled $17.6 million, compared to $7.5 million. Net charge-offs were $26.4 million, or 0.41% annualized, of total average loans for the fourth quarter of 2020 as a result of the exit of commercial loans in COVID-19 sensitive industries, primarily within the hotel and lodging sector, utilizing previously established reserves. The ratio of the ACL to total loans and leases was 1.43% and 0.84% at December 31, 2020 and 2019, respectively, with the 2020 figure reflecting the adoption of CECL on January 1st and COVID-19 impacts. Excluding PPP loans that do not carry an ACL due to a 100% government guarantee, the ACL to total loans and leases ratio equaled 1.56% at December 31, 2020. Additionally, the CECL adoption on January 1, 2020, resulted in a Day 1 increase to the ACL of $105.3 million.

The effective tax rate was 15.9%, compared to 17.6%, as a result of relatively lower levels of pre-tax earnings for the fourth quarter of 2020 due to the significant items.

The tangible common equity to tangible assets ratio (non-GAAP) decreased 34 basis points to 7.24% at December 31, 2020, compared to 7.58% at December 31, 2019, as the PPP loan activity temporarily impacted the TCE ratio by 47 basis points at December 31, 2020, and the day 1 CECL adoption resulted in a $50.6 million, or 16 basis point, impact on January 1, 2020. The tangible book value per common share (non-GAAP) was $7.88 at December 31, 2020, an increase of $0.35, or 4.7%, from $7.53 at December 31, 2019. During the fourth quarter of 2020, the company repurchased 1.63 million shares of common stock at a weighted average share price of $8.22 for a total of $13.4 million, bringing the full year 2020 totals to nearly 4.0 million shares at a weighted average share price of $9.63 for $38.4 million under the existing share repurchase program.

Fourth Quarter 2020 Results ? Comparison to Prior Quarter

Net interest income totaled $234.4 million, an increase of $7.3 million, or 3.2%, from the prior quarter total of $227.1 million due primarily to the continued focus on reducing deposit and borrowing costs in a lower interest rate environment and increased PPP contribution to net interest income, offsetting the impact of lower interest rates on loans and investment securities. The resulting net interest margin (FTE) (non-GAAP) increased 8 basis points to 2.87%.

Total average earning assets increased $96 million, or 0.3%, led by an $80 million increase in average investment securities. The total yield on earning assets declined 3 basis points to 3.31%, reflecting lower yields on fixed-rate and variable-rate loans originated and securities purchases, including overnight investments, in a lower rate environment. The total cost of funds decreased 11 basis points to 0.45% from 0.56%, as costs on interest-bearing deposits improved 12 basis points to 0.43%.

Average loans totaled $25.7 billion with average commercial loans flat compared to the third quarter and a decrease in average consumer loans of $413.4 million, or 4.9%. Average commercial loans included growth of $257.7 million, or 2.7%, in commercial real estate offset by a decrease of $247.4 million, or 3.2%, in commercial and industrial loans. Commercial origination activity was led by the Pittsburgh, Cleveland, and Mid-Atlantic regions. The primary driver for the decrease in average consumer loans was the indirect installment loans decline of $383.1 million due to the previously noted indirect auto sale, coupled with a decline of $33 million, or 2.4%, in average consumer lines of credit, and a $32 million, or 0.9%, decline in average residential mortgage loans, which were partially offset by an increase in average direct installment loans of $35 million, or 1.8%.

Average deposits totaled $29.0 billion, increasing $556 million, or 2.0%, driven by an increase in interest-bearing deposits of $651 million, or 4.2%, and non-interest-bearing deposits of $217 million, or 2.5%. This growth was partially offset by a managed decline in time deposits of $312 million, or 7.5%. 

The loan-to-deposit ratio was 87.4% at December 31, 2020, compared to 89.1% at September 30, 2020.

Non-interest income totaled $68.4 million, decreasing $11.7 million, or 14.6%. On an operating basis, non-interest income decreased $2.7 million, or 3.2%, when excluding significant items of $12.3 million in the fourth quarter and $3.3 million in the third quarter of 2020. Mortgage banking operations decreased $3.5 million, or 18.7%, to $15.3 million, as mortgage production was at record levels in the third quarter of 2020. We continue to generate strong mortgage production with large contributions from the Mid-Atlantic and Pittsburgh regions, and the results also reflect above average gain-on-sale margins compared to historical levels. On an operating basis, service charges increased $1.7 million, or 6.1%, as customer transaction volume increased in the fourth quarter of 2020 and activity levels have continued to trend favorably.

Non-interest expense totaled $199.3 million, an increase of $19.1 million, or 10.6%, which included $4.7 million of COVID-19 expenses in the fourth quarter of 2020, compared to $2.7 million in the third quarter, as well as $10.5 million of branch consolidation costs in the fourth quarter. Excluding these expenses, operating non-interest expense increased $6.6 million, or 3.7%, primarily driven by $1.9 million in outside services, as well as higher production-related commissions and incentives. The efficiency ratio (non-GAAP) equaled 56.5%, compared to 55.3%.

The ratio of non-performing loans, 90 days past due, and OREO to total loans and OREO decreased 7 basis points to 0.77%. Total delinquency decreased 5 basis points to 1.02%, compared to 1.07% at September 30, 2020. Excluding PPP, total delinquency decreased 7 basis points to 1.11%. The total level of loans on temporary deferral is 1.7% as of December 31, 2020, compared to 3.4% as of September 30, 2020.

The provision for credit losses totaled $17.6 million, compared to $27.2 million, reflecting an improvement in the macroeconomic outlook. Net charge-offs totaled $26.4 million, or 0.41% annualized of total average loans and leases, compared to $19.3 million, or 0.29% annualized. The ratio of the ACL to total loans and leases was 1.43% and 1.45% at December 31, 2020, and September 30, 2020, respectively. Excluding PPP net loans that do not carry an ACL due to a 100% government guarantee, the ACL to total loans and leases ratio equaled 1.56%, compared to 1.61% at September 30, 2020.

The effective tax rate was 15.9%, compared to 17.0%, as a result of lower levels of pre-tax earnings for the fourth quarter of 2020 due to the significant items. 

The tangible common equity to tangible assets ratio (non-GAAP) increased 5 basis points to 7.24% at December 31, 2020, compared to 7.19% at September 30, 2020. Tangible book value per common share (non-GAAP) was $7.88 at December 31, 2020, an increase of $0.07 from September 30, 2020. During the fourth quarter of 2020, the company repurchased 1.63 million shares of common stock at a weighted average share price of $8.22, bringing the full year 2020 totals to nearly 4.0 million shares at a weighted average share price of $9.63 under the existing share repurchase program.

2020 Full-Year Results - Comparison to Full-Year 2019 Period

Net interest income totaled $922.1 million, increasing $4.8 million, or 0.5%, as average earning asset growth of $2.7 billion, or 9.2%, offset the impact from a lower rate environment. The net interest margin (FTE) (non-GAAP) contracted 26 basis points to 2.91%, primarily from the impact of lower interest rates as average 1-month LIBOR for the full year of 2020 declined to 0.52% from 2.22% for the full year of 2019. The yield on earning assets decreased 73 basis points to 3.56%, while the cost of funds improved 49 basis points to 0.66%, primarily due to actions taken to reduce the cost of interest-bearing deposits given the low interest rate environment, strong growth in non-interest-bearing deposits, and the termination of higher-rate borrowings. 

Average loans totaled $25.2 billion, an increase of $2.4 billion, or 10.7%, due to the net benefit from PPP loans and solid origination activity across the footprint. Growth in average commercial loans totaled $2.5 billion, or 17.4%, including growth of $1.7 billion, or 33.8%, in commercial and industrial loans and $0.7 billion, or 8.4%, in commercial real estate. Commercial growth was led by strong commercial activity in the Pittsburgh, Cleveland, South Carolina, and Mid-Atlantic regions. Total average consumer loans were flat. Residential mortgage loans increased $227 million, or 7.0%, and direct installment balances increased $169 million, or 9.6%, offset by a decrease in indirect installment loans of $318 million, or 16.3%, due to the sale of approximately $500 million of indirect auto loans in November 2020, as well as a decline of $133 million, or 8.8%, in consumer credit lines.

Average deposits totaled $27.3 billion, increasing $3.3 billion, or 13.6%, led by average growth of $2.0 billion, or 20.1%, in interest-bearing demand deposits and $1.9 billion, or 30.6%, in non-interest-bearing deposits. On a spot basis, total deposits increased $4.3 billion, or 17.5%, driven by deposits from PPP funding and government stimulus activities, as well as solid organic growth in customer relationships.

Non-interest income totaled $294.6 million, increasing $0.3 million, or 0.1%. On an operating basis, non-interest income increased $9.9 million, or 3.3%, when excluding significant items impacting earnings of $15.6 million and $6.0 million in 2020 and 2019, respectively, primarily attributable to the fee-based businesses of mortgage banking, capital markets, and wealth management. Mortgage banking income increased $18.0 million, or 56.7%, as sold production levels increased 19% and gain-on-sale margins improved meaningfully, partially offset by net impairment of mortgage servicing rights totaling $5.8 million and $1.1 million for 2020 and 2019, respectively. Capital markets increased $6.1 million, or 18.4%, reflecting FNB's strong relationships with new and existing commercial customers. Wealth management revenues increased $3.7 million as trust income increased 12.1% through an expanded geographic footprint and positive market impacts on assets under management. Service charges declined $16.1 million, or 13.0%, as there were noticeably lower customer transaction volumes in the COVID-19 environment, although volumes have steadily increased in the second half of 2020. There was also a decline in FHLB borrowings and a reduction of the FHLB dividend rate resulting in the $4.9 million, or 26.3%, decrease in dividends on non-marketable equity securities. The $25.6 million charge on $715 million of FHLB debt extinguishment and related hedge termination costs and a $13.8 million gain on the sale of the Bank's holdings of Visa Class B shares were both recorded in other non-interest income.

Non-interest expense totaled $750.3 million, increasing $54.2 million, or 7.8%. Excluding significant items totaling $30.0 million in 2020 and $2.8 million in 2019, operating non-interest expense increased $27.0 million, or 3.9%  This increase was attributable to higher salaries and employee benefit expense of $26.4 million, or 7.1%, primarily related to production-related commissions and incentives and normal merit increases, as well as increases in outside services of $4.5 million, or 7.0%. Net occupancy and equipment increased $2.6 million, or 2.2%, as the benefit from branch optimization efforts mostly offset continued digital investment and expansion in key regions such as the Mid-Atlantic and South Carolina. The efficiency ratio (non-GAAP) equaled 56.1%, compared to 54.5% in 2019.

The provision for credit losses was $122.8 million, compared to $44.6 million, which reflected COVID-19 related macroeconomic impacts and the life-of-loan CECL reserving requirements in 2020. Net charge-offs totaled $59.8 million, or 0.24%, of total average loans, compared to $28.3 million, or 0.12%, in 2019, reflecting COVID-19 impacts on certain segments of the loan portfolio.

The effective tax rate was 16.7% for 2020, compared to 17.7% in 2019, primarily resulting from lower pre-tax earnings and significant items in 2020. Both years are lower than the federal statutory rate of 21% largely due to the tax benefits resulting from tax-exempt income and renewable energy investment tax credits.

Use of Non-GAAP Financial Measures and Key Performance Indicators

To supplement our Consolidated Financial Statements presented in accordance with GAAP, we use certain non-GAAP financial measures, such as operating net income available to common stockholders, operating earnings per diluted common share, return on average tangible equity, return on average tangible common equity, operating return on average tangible common equity, return on average tangible assets, tangible book value per common share, the ratio of tangible equity to tangible assets, the ratio of tangible common equity to tangible assets, allowance for credit losses to loans and leases, excluding PPP loans, non-performing loans to loans and leases excluding PPP loans, non-performing loans and 90 days past due and OREO to loans and leases plus OREO, excluding PPP loans, net loan charge-offs to average loans and leases excluding PPP loans, past due and non-accrual loans to loans and leases excluding PPP loans, pre-provision net revenue to average tangible common equity, efficiency ratio, and net interest margin (FTE) to provide information useful to investors in understanding our operating performance and trends, and to facilitate comparisons with the performance of our peers. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The non-GAAP financial measures and key performance indicators we use may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to assess their performance and trends.

These non-GAAP financial measures should be viewed as supplemental in nature, and not as a substitute for or superior to, our reported results prepared in accordance with GAAP. When non-GAAP financial measures are disclosed, the Securities and Exchange Commission's (SEC) Regulation G requires: (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. Reconciliations of non-GAAP operating measures to the most directly comparable GAAP financial measures are included later in this release under the heading "Reconciliations of Non-GAAP Financial Measures and Key Performance Indicators to GAAP."

Management believes charges such as branch consolidation costs, certain service charge refunds, and COVID-19 expenses are not organic costs to run our operations and facilities. These charges are considered significant items impacting earnings as they are deemed to be outside of ordinary banking activities. The branch consolidation charges principally represent expenses to satisfy contractual obligations of the closed branches without any useful ongoing benefit to us. These costs are specific to each individual transaction and may vary significantly based on the size and complexity of the transaction. Similarly, gains derived from the sale of Visa class B stock and losses on FHLB debt extinguishment and related hedge terminations are not organic to our operations. The COVID-19 expenses represent special Company initiatives to support our employees and the communities we serve during an unprecedented time of a pandemic.

To provide more meaningful comparisons of net interest margin and efficiency ratio, we use net interest income on a taxable-equivalent basis in calculating net interest margin by increasing the interest income earned on tax-exempt assets (loans and investments) to make it fully equivalent to interest income earned on taxable investments (this adjustment is not permitted under GAAP). Taxable-equivalent amounts for the 2020 and 2019 periods were calculated using a federal statutory income tax rate of 21%.

Cautionary Statement Regarding Forward-Looking Information

This document may contain statements regarding F.N.B. Corporation's outlook for earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset quality levels, financial position and other matters regarding or affecting our current or future business and operations. These statements can be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve various assumptions, risks and uncertainties which can change over time. Actual results or future events may be different from those anticipated in our forward-looking statements and may not align with historical performance and events. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance upon such statements. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "will," "should," "project," "goal," and other similar words and expressions. We do not assume any duty to update forward-looking statements, except as required by federal securities laws.

F.N.B.'s forward-looking statements are subject to the following principal risks and uncertainties:

The risks identified here are not exclusive or the types of risks F.N.B. may confront and actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties described under Item 1A Risk Factors and Risk Management sections of our Annual Report on Form 10-K (including the MD&A section) for the year ended December 31, 2019, our subsequent 2020 Quarterly Reports on Form 10-Q (including the risk factors and risk management discussions) and our other subsequent filings with the SEC, which are available on our corporate website at https://www.fnb-online.com/about-us/investor-relations-shareholder-services. More specifically, our forward-looking statements may be subject to the evolving risks and uncertainties related to the COVID-19 pandemic and its macro-economic impact and the resulting governmental, business and societal responses to it. We have included our web address as an inactive textual reference only. Information on our website is not part of this Report.

Conference Call

F.N.B. Corporation (NYSE: FNB) announced the financial results for the fourth quarter of 2020 on Tuesday, January 19, 2021. Chairman, President and Chief Executive Officer, Vincent J. Delie, Jr., Chief Financial Officer, Vincent J. Calabrese, Jr., and Chief Credit Officer, Gary L. Guerrieri, plan to host a conference call to discuss the Company's financial results on Wednesday, January 20, 2021, at 8:15 AM ET.

Participants are encouraged to pre-register for the conference call at http://dpregister.com/10151002. Callers who pre-register will be provided a conference passcode and unique PIN to bypass the live operator and gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time.

Dial-in Access: The conference call may be accessed by dialing (844) 802-2440 (for domestic callers) or (412) 317-5133 (for international callers). Participants should ask to be joined into the F.N.B. Corporation call.

Webcast Access: The audio-only call and related presentation materials may be accessed via webcast through the "Investor Relations" section under the "About Us" tab of the Corporation's website at www.fnbcorporation.com. Access to the live webcast will begin approximately 30 minutes prior to the start of the call.

Presentation Materials: Presentation slides and the earnings release will also be available on the Corporation's website at www.fnbcorporation.com, by accessing the "About Us" tab and clicking on "Investor Relations" then "Investor Conference Calls".

A replay of the call will be available shortly after the completion of the call until midnight ET on Wednesday, January 27, 2021. The replay can be accessed by dialing (877) 344-7529 (for domestic callers) or (412) 317-0088 (for international callers); the conference replay access code is 10151002. Following the call, a link to the webcast and the related presentation materials will be posted to the "Investor Relations" section of F.N.B. Corporation's website 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 seven states and the District of Columbia. FNB's market coverage spans several major metropolitan areas including: Pittsburgh, Pennsylvania; Baltimore, Maryland; Cleveland, Ohio; Washington, D.C.; and Charlotte, Raleigh, Durham and the Piedmont Triad (Winston-Salem, Greensboro and High Point) in North Carolina. The Company has total assets of more than $37 billion and approximately 350 banking offices throughout Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina, Washington, D.C. and Virginia.

FNB 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, government 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. FNB's wealth management services include asset management, private banking and insurance.

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 MidCap 400 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 website at www.fnbcorporation.com.

 

F.N.B. CORPORATION AND SUBSIDIARIES













CONSOLIDATED STATEMENTS OF INCOME











(Dollars in thousands, except per share data)















(Unaudited)







% Variance














4Q20


4Q20


For the Twelve Months Ended
December 31,


%


4Q20


3Q20


4Q19


3Q20


4Q19


2020


2019


Var.

Interest Income
















Loans and leases, including fees

$

239,771



$

239,443



$

265,731



0.1



(9.8)



$

990,125



$

1,084,358



(8.7)


Securities:
















   Taxable

23,061



24,807



30,910



(7.0)



(25.4)



106,576



126,101



(15.5)


   Tax-exempt

7,753



7,955



8,066



(2.5)



(3.9)



31,695



32,156



(1.4)


Other

304



226



1,357



34.5



(77.6)



1,910



4,404



(56.6)


     Total Interest Income 

270,889



272,431



306,064



(0.6)



(11.5)



1,130,306



1,247,019



(9.4)


Interest Expense
















Deposits

21,517



27,421



55,580



(21.5)



(61.3)



132,871



216,623



(38.7)


Short-term borrowings

7,531



8,893



14,082



(15.3)



(46.5)



38,504



79,990



(51.9)


Long-term borrowings

7,449



9,019



9,965



(17.4)



(25.2)



36,849



33,167



11.1


     Total Interest Expense

36,497



45,333



79,627



(19.5)



(54.2)



208,224



329,780



(36.9)


       Net Interest Income

234,392



227,098



226,437



3.2



3.5



922,082



917,239



0.5


Provision for credit losses

17,556



27,227



7,544



(35.5)



132.7



122,798



44,561



175.6


      Net Interest Income After
      Provision for Credit Losses

216,836



199,871



218,893



8.5



(0.9)



799,284



872,678



(8.4)


Non-Interest Income
















Service charges

29,784



24,296



28,842



22.6



3.3



108,146



124,285



(13.0)


Trust services

8,204



7,733



7,151



6.1



14.7



31,249



27,885



12.1


Insurance commissions and fees

5,424



6,401



5,014



(15.3)



8.2



24,212



20,463



18.3


Securities commissions and fees

4,645



4,494



3,957



3.4



17.4



17,441



17,088



2.1


Capital markets income

7,507



8,202



8,608



(8.5)



(12.8)



39,337



33,224



18.4


Mortgage banking operations

15,317



18,831



10,417



(18.7)



47.0



49,665



31,689



56.7


Dividends on non-marketable equity securities

3,796



2,496



4,918



52.1



(22.8)



13,736



18,641



(26.3)


Bank owned life insurance

2,867



3,867



3,130



(25.9)



(8.4)



13,835



11,794



17.3


Net securities gains

20



112



35



(82.1)



(42.9)



282



70



302.9


Other

(9,200)



3,606



1,969



(355.1)



(567.2)



(3,347)



9,127



(136.7)


     Total Non-Interest Income

68,364



80,038



74,041



(14.6)



(7.7)



294,556



294,266



0.1


Non-Interest Expense
















Salaries and employee benefits

107,467



100,265



95,913



7.2



12.0



405,529



375,084



8.1


Net occupancy

22,287



13,837



14,056



61.1



58.6



71,166



58,416



21.8


Equipment

16,651



17,005



16,491



(2.1)



1.0



65,312



61,903



5.5


Amortization of intangibles

3,341



3,339



3,607



0.1



(7.4)



13,362



14,167



(5.7)


Outside services

18,686



16,676



17,285



12.1



8.1



69,258



64,006



8.2


FDIC insurance

5,083



4,064



5,621



25.1



(9.6)



20,073



23,294



(13.8)


Bank shares and franchise taxes

2,477



3,778



2,348



(34.4)



5.5



14,376



12,493



15.1


Other

23,324



21,245



22,044



9.8



5.8



91,273



86,765



5.2


     Total Non-Interest Expense

199,316



180,209



177,365



10.6



12.4



750,349



696,128



7.8


Income Before Income Taxes

85,884



99,700



115,569



(13.9)



(25.7)



343,491



470,816



(27.0)


Income taxes

13,681



16,924



20,376



(19.2)



(32.9)



57,485



83,567



(31.2)


Net Income

72,203



82,776



95,193



(12.8)



(24.2)



286,006



387,249



(26.1)


Preferred stock dividends

2,011



2,010



2,011



?



?



8,041



8,041



?


Net Income Available to Common Stockholders

$

70,192



$

80,766



$

93,182



(13.1)



(24.7)



$

277,965



$

379,208



(26.7)


Earnings per Common Share
















Basic

$

0.22



$

0.25



$

0.29



(12.0)



(24.1)



$

0.86



$

1.17



(26.5)


Diluted

0.22



0.25



0.29



(12.0)



(24.1)



0.85



1.16



(26.7)


Cash Dividends per Common Share

0.12



0.12



0.12



?



?



0.48



0.48



?


 


F.N.B. CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS





(Unaudited)










(Dollars in millions)







% Variance








4Q20


4Q20


4Q20


3Q20


4Q19


3Q20


4Q19

Assets










Cash and due from banks

$

369



$

396



$

407



(6.8)



(9.3)


Interest-bearing deposits with banks

1,014



504



192



101.2



428.1


Cash and Cash Equivalents

1,383



900



599



53.7



130.9


Securities available for sale

3,463



3,101



3,289



11.7



5.3


Securities held to maturity

2,868



2,966



3,275



(3.3)



(12.4)


Loans held for sale

154



680



51



(77.4)



202.0


Loans and leases, net of unearned income

25,459



25,689



23,289



(0.9)



9.3


Allowance for credit losses

(363)



(373)



(196)



(2.7)



85.2


Net Loans and Leases

25,096



25,316



23,093



(0.9)



8.7


Premises and equipment, net

332



335



333



(0.9)



(0.3)


Goodwill

2,262



2,262



2,262



?



?


Core deposit and other intangible assets, net

54



57



67



(5.3)



(19.4)


Bank owned life insurance

549



548



544



0.2



0.9


Other assets

1,193



1,276



1,102



(6.5)



8.3


Total Assets

$

37,354



$

37,441



$

34,615



(0.2)



7.9


Liabilities










Deposits:










Non-interest-bearing demand

$

9,042



$

8,741



$

6,384



3.4



41.6


Interest-bearing demand

13,157



13,063



11,049



0.7



19.1


Savings

3,261



3,007



2,625



8.4



24.2


Certificates and other time deposits

3,662



4,025



4,728



(9.0)



(22.5)


Total Deposits

29,122



28,836



24,786



1.0



17.5


Short-term borrowings

1,804



1,899



3,216



(5.0)



(43.9)


Long-term borrowings

1,095



1,397



1,340



(21.6)



(18.3)


Other liabilities

374



358



390



4.5



(4.1)


Total Liabilities

32,395



32,490



29,732



(0.3)



9.0


Stockholders' Equity










Preferred stock

107



107



107



?



?


Common stock

3



3



3



?



?


Additional paid-in capital

4,087



4,084



4,067



0.1



0.5


Retained earnings

869



838



798



3.7



8.9


Accumulated other comprehensive loss

(39)



(26)



(65)



50.0



(40.0)


Treasury stock

(68)



(55)



(27)



23.6



151.9


Total Stockholders' Equity

4,959



4,951



4,883



0.2



1.6


Total Liabilities and Stockholders' Equity

$

37,354



$

37,441



$

34,615



(0.2)



7.9


 


F.N.B. CORPORATION AND SUBSIDIARIES


4Q20


3Q20


4Q19

(Unaudited)




Interest






Interest






Interest



(Dollars in thousands)


Average


Income/


Yield/


Average


Income/


Yield/


Average


Income/


Yield/



Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate

Assets



















Interest-bearing deposits with banks


$

869,328



$

304



0.14

%


$

543,731



$

226



0.17

%


$

83,948



$

1,357



6.41

%

Taxable investment securities (2)


4,927,403



22,881



1.86



4,849,384



24,710



2.04



5,304,096



30,910



2.33


Non-taxable investment securities (1)


1,144,330



9,942



3.47



1,142,971



10,101



3.54



1,127,145



10,079



3.58


Loans held for sale


380,941



4,429



4.63



282,917



3,349



4.72



68,585



1,608



9.37


Loans and leases (1) (3)


25,655,784



236,333



3.67



26,063,431



237,063



3.62



23,230,888



265,584



4.54


Total Interest Earning Assets (1)


32,977,786



273,889



3.31



32,882,434



275,449



3.34



29,814,662



309,538



4.13


Cash and due from banks


356,260







369,263







395,967






Allowance for credit losses


(374,816)







(371,199)







(198,115)






Premises and equipment


339,805







335,711







332,042






Other assets


4,170,156







4,250,497







4,056,558






Total Assets


$

37,469,191







$

37,466,706







$

34,401,114






Liabilities



















Deposits:



















Interest-bearing demand


$

13,122,204



7,866



0.24



$

12,584,154



10,041



0.32



$

11,035,271



28,964



1.04


Savings


3,104,420



171



0.02



2,991,381



261



0.03



2,558,931



2,003



0.31


Certificates and other time


3,837,255



13,480



1.40



4,149,263



17,119



1.64



4,906,013



24,613



1.99


Total interest-bearing deposits


20,063,879



21,517



0.43



19,724,798



27,421



0.55



18,500,215



55,580



1.19


Short-term borrowings


1,918,362



7,531



1.56



2,217,640



8,893



1.59



2,963,033



14,082



1.88


Long-term borrowings


1,280,964



7,449



2.31



1,526,968



9,019



2.35



1,339,795



9,965



2.95


Total Interest-Bearing Liabilities  


23,263,205



36,497



0.62



23,469,406



45,333



0.77



22,803,043



79,627



1.38


Non-interest-bearing demand deposits


8,889,086







8,671,940







6,337,845






Total Deposits and Borrowings


32,152,291





0.45



32,141,346





0.56



29,140,888





1.08


Other liabilities


370,351







409,427







408,737






Total Liabilities


32,522,642







32,550,773







29,549,625






Stockholders' Equity


4,946,549







4,915,933







4,851,489






Total Liabilities and Stockholders' Equity


$

37,469,191







$

37,466,706







$

34,401,114






Net Interest Earning Assets


$

9,714,581







$

9,413,028







$

7,011,619






Net Interest Income (FTE) (1)




237,392







230,116







229,911




Tax Equivalent Adjustment




(3,000)







(3,018)







(3,474)




Net Interest Income




$

234,392







$

227,098







$

226,437




Net Interest Spread






2.69

%






2.57

%






2.75

%

Net Interest Margin  (1)






2.87

%






2.79

%






3.07

%




(1)


The net interest margin and yield on earning assets (all non-GAAP measures) are presented on a fully taxable equivalent (FTE) basis, which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%. 

(2)


The average balances and yields earned on taxable investment securities are based on historical cost.

(3)


Average balances for loans include non-accrual loans.  Loans and leases consist of average total loans and leases less average unearned income.  The amount of loan fees included in interest income is immaterial.

 


F.N.B. CORPORATION AND SUBSIDIARIES


Twelve Months Ended December 31,

(Unaudited)


2020


2019

(Dollars in thousands)




Interest






Interest





Average


Income/


Yield/


Average


Income/


Yield/



Balance


Expense


Rate


Balance


Expense


Rate

Assets













Interest-bearing deposits with banks


$

470,466



$

1,910



0.41

%


$

73,834



$

4,404



5.96

%

Taxable investment securities (2)


5,038,547



106,266



2.11



5,296,830



126,101



2.38


Non-taxable investment securities (1)


1,132,307



40,121



3.54



1,121,026



40,155



3.58


Loans held for sale


212,328



9,817



4.62



102,344



5,386



5.26


Loans and leases (1) (3)


25,211,191



984,662



3.91



22,776,639



1,085,094



4.76


Total Interest Earning Assets (1)


32,064,839



1,142,776



3.56



29,370,673



1,261,140



4.29


Cash and due from banks


359,936







382,144






Allowance for credit losses


(350,309)







(191,171)






Premises and equipment


336,117







330,920






Other assets


4,196,847







3,958,197






Total Assets


$

36,607,430







$

33,850,763






Liabilities













Deposits:













Interest-bearing demand


$

12,161,766



57,224



0.47



$

10,123,701



104,236



1.03


Savings


2,890,440



2,822



0.10



2,532,456



8,535



0.34


Certificates and other time


4,261,738



72,825



1.71



5,268,208



103,852



1.97


Total interest-bearing deposits


19,313,944



132,871



0.69



17,924,365



216,623



1.21


Short-term borrowings


2,515,558



38,504



1.53



3,551,135



79,990



2.24


Long-term borrowings


1,473,708



36,849



2.50



1,108,135



33,167



2.99


Total Interest-Bearing Liabilities  


23,303,210



208,224



0.89



22,583,635



329,780



1.46


Non-interest-bearing demand deposits


8,004,557







6,128,196






Total Deposits and Borrowings


31,307,767





0.66



28,711,831





1.15


Other liabilities


395,363







381,467






Total Liabilities


31,703,130







29,093,298






Stockholders' Equity


4,904,300







4,757,465






Total Liabilities and Stockholders' Equity


$

36,607,430







$

33,850,763






Net Interest Earning Assets


$

8,761,629







$

6,787,038






Net Interest Income (FTE) (1)




934,552







931,360




Tax Equivalent Adjustment




(12,470)







(14,121)




Net Interest Income




$

922,082







$

917,239




Net Interest Spread






2.67

%






2.83

%

Net Interest Margin (1)






2.91

%






3.17

%




(1)


The net interest margin and yield on earning assets (all non-GAAP measures) are presented on a fully taxable equivalent (FTE) basis, which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%. 

(2)


The average balances and yields earned on taxable investment securities are based on historical cost.

(3)


Average balances for loans include non-accrual loans.  Loans and leases consist of average total loans and leases less average unearned income.  The amount of loan fees included in interest income is immaterial.

 


F.N.B. CORPORATION AND SUBSIDIARIES






(Unaudited)



























For the Twelve Months Ended
December 31,


4Q20


3Q20


4Q19


2020


2019

Performance Ratios










Return on average equity

5.81

%


6.70

%


7.78

%


5.83

%


8.14

%

Return on average tangible equity (1) 

11.33



13.10



15.43



11.49



16.42


Return on average tangible

common equity (1) 

11.49



13.34



15.79



11.66



16.84


Return on average assets

0.77



0.88



1.10



0.78



1.14


Return on average tangible assets (1) 

0.85



0.97



1.21



0.87



1.26


Net interest margin (FTE) (2)

2.87



2.79



3.07



2.91



3.17


Yield on earning assets (FTE) (2)

3.31



3.34



4.13



3.56



4.29


Cost of interest-bearing deposits

0.43



0.55



1.19



0.69



1.21


Cost of interest-bearing liabilities 

0.62



0.77



1.38



0.89



1.46


Cost of funds 

0.45



0.56



1.08



0.66



1.15


Efficiency ratio (1)

56.52



55.26



55.99



56.13



54.51


Effective tax rate

15.93



16.97



17.63



16.74



17.75


Pre-provision net revenue (reported) / average tangible common equity (1)

16.32



20.30



20.24



18.84



22.22


Pre-provision net revenue (operating) / average tangible common equity (1)

20.65



21.25



20.94



20.85



22.74


Capital Ratios










Equity / assets (period end)

13.28



13.22



14.11






Common equity / assets (period end)

12.99



12.94



13.80






Common equity tier 1 (3)

9.8



9.6



9.4






Leverage ratio

7.83



7.78



8.20






Tangible equity / tangible assets

(period end) (1)

7.54



7.49



7.91






Tangible common equity / tangible assets (period end) (1)

7.24



7.19



7.58






Common Stock Data










Average diluted common shares outstanding

324,876,951



325,662,780



326,515,973



325,487,964



326,061,138


Period end common shares outstanding

321,629,529



323,212,398



325,014,560






Book value per common share

$

15.09



$

14.99



$

14.70






Tangible book value per common share (1)

7.88



7.81



7.53






Dividend payout ratio (common)

55.82

%


48.65

%


42.22

%


56.45

%


41.45

%



















(1)


See non-GAAP financial measures section of this Press Release for additional information relating to the calculation of this item.

(2)


The net interest margin and yield on earning assets (all non-GAAP measures) are presented on a fully taxable equivalent (FTE) basis, which adjusts for the tax benefit of income on certain tax-exempt loans and investments using the federal statutory tax rate of 21%. 

(3)


December 31, 2020 Common Equity Tier 1 ratio is an estimate and reflects the election of a five-year transition to delay the full impact of CECL on regulatory capital for two years, followed by a three-year transition period.

 


F.N.B. CORPORATION AND SUBSIDIARIES













(Unaudited)
















(Dollars in millions)























% Variance














4Q20


4Q20








4Q20


3Q20


4Q19


3Q20


4Q19







Balances at period end
















Loans and Leases:
















Commercial real estate 

$

9,731



$

9,521



$

8,960



2.2



8.6








Commercial and industrial (1)

7,214



7,547



5,308



(4.4)



35.9








Commercial leases

485



487



432



(0.4)



12.3








Other

40



65



21



(38.5)



90.5








Commercial loans and leases

17,470



17,620



14,721



(0.9)



18.7








Direct installment

2,020



1,977



1,821



2.2



10.9








Residential mortgages

3,433



3,531



3,374



(2.8)



1.7








Indirect installment

1,218



1,219



1,922



(0.1)



(36.6)








Consumer LOC

1,318



1,342



1,451



(1.8)



(9.2)








Consumer loans

7,989



8,069



8,568



(1.0)



(6.8)








Total loans and leases

$

25,459



$

25,689



$

23,289



(0.9)



9.3















Note: Loans held for sale were $154, $680 and $51 at 4Q20, 3Q20, and 4Q19, respectively.







(1) PPP loans were $2.2 billion and $2.5 billion at 4Q20 and 3Q20, respectively.














% Variance







Average balances







4Q20


4Q20


For the Twelve Months Ended
December 31,


%

Loans and Leases:

4Q20


3Q20


4Q19


3Q20


4Q19


2020


2019


Var.

Commercial real estate 

$

9,702



$

9,443



$

8,947



2.7



8.4



$

9,608



$

8,867



8.4


Commercial and industrial (1)

7,380



7,628



5,256



(3.2)



40.4



6,684



4,997



33.8


Commercial leases

477



492



440



(3.1)



8.4



474



394



20.4


Other

59



49



51



21.3



16.8



33



52



(36.6)


Commercial loans and leases

17,618



17,612



14,694



?



19.9



16,799



14,310



17.4


Direct installment

1,995



1,960



1,785



1.8



11.8



1,930



1,761



9.6


Residential mortgages

3,490



3,522



3,350



(0.9)



4.2



3,470



3,243



7.0


Indirect installment

1,226



1,609



1,936



(23.8)



(36.7)



1,632



1,950



(16.3)


Consumer LOC

1,327



1,360



1,466



(2.4)



(9.5)



1,380



1,513



(8.8)


Consumer loans

8,038



8,451



8,537



(4.9)



(5.8)



8,412



8,467



(0.6)


Total loans and leases

$

25,656



$

26,063



$

23,231



(1.6)



10.4



$

25,211



$

22,777



10.7



(1) PPP average loans were $2.5 billion and $2.5 billion at 4Q20 and 3Q20, respectively, and $1.6 billion for the full year of 2020.

 


F.N.B. CORPORATION AND SUBSIDIARIES





(Unaudited)







% Variance

(Dollars in millions)







4Q20


4Q20

Asset Quality Data

4Q20


3Q20


4Q19


3Q20


4Q19

Non-Performing Assets










Non-performing loans (1)

$

170



$

178



$

103



(4.5)



65.0


Other real estate owned (OREO)

10



20



26



(50.0)



(61.5)


Non-performing assets

$

180



$

198



$

129



(9.1)



39.5


Non-performing loans / total loans and leases

0.67

%


0.69

%


0.44

%





Non-performing loans + 90 days past due + OREO / total loans and leases + OREO

0.77



0.84



0.73






Delinquency (2)










Loans 30-89 days past due

$

73



$

78



$

95



(6.4)



(23.2)


Loans 90+ days past due

16



18



42



(11.1)



(61.9)


Non-accrual loans

170



178



81



(4.5)



109.9


Past due and non-accrual loans

$

259



$

274



$

218



(5.5)



18.8


Past due and non-accrual loans / total loans and leases

1.02

%


1.07

%


0.94

%








(1)


Does not include loans acquired in a business combination at fair value for 4Q19.

(2)


Delinquency for the acquired portfolio was $73 at 4Q19.

 


F.N.B. CORPORATION AND SUBSIDIARIES












(Unaudited)







% Variance







(Dollars in millions)







4Q20


4Q20


For the Twelve Months Ended
December 31,


%

Allowance on Loans and Leases Rollforward

4Q20


3Q20


4Q19


3Q20


4Q19


2020


2019


Var.

Allowance for Credit Losses (1)
















Balance at beginning of period

$

373.0



$

365.0



$

193.6



2.2



92.6



$

195.9



$

179.6



9.0


Provision for credit losses 

16.5



27.2



7.5



(39.3)



119.0



121.8



44.6



173.2


Net loan (charge-offs)/recoveries

(26.4)



(19.3)



(5.3)



37.0



397.5



(59.8)



(28.3)



111.1


Adjustment due to CECL adoption

?



?



?







105.3



?




Allowance for credit losses

$

363.1



$

373.0



$

195.9



(2.6)



85.4



$

363.1



$

195.9



85.4


Allowance for credit losses / total loans and leases

1.43

%


1.45

%


0.84

%











Allowance for credit losses / total non-performing loans

213.2



209.8



190.2












Net loan charge-offs (annualized) / total average loans and leases

0.41



0.29



0.09







0.24

%


0.12

%





(1)

The allowance for credit losses for the acquired portfolio was $7 at December 31, 2019.

 


F.N.B. CORPORATION AND SUBSIDIARIES










(Unaudited)
































RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS TO GAAP

We believe the following non-GAAP financial measures provide information useful to investors in understanding our operating performance and trends, and facilitate comparisons with the performance of our peers.  The non-GAAP financial measures we use 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, our reported results prepared in accordance with U.S. GAAP.  The following tables summarize the non-GAAP financial measures included in this press release and derived from amounts reported in our financial statements.








% Variance














4Q20


4Q20


For the Twelve Months Ended
December 31,


%


4Q20


3Q20


4Q19


3Q20


4Q19


2020


2019


Var.

Operating net income available to common stockholders:
















(Dollars in thousands)
















Net income available to common stockholders

$

70,192



$

80,766



$

93,182







$

277,965



$

379,208




COVID-19 expense

4,654



2,671



?







11,276



?




Tax benefit of COVID-19 expense

(977)



(561)



?







(2,368)



?




Gain on sale of Visa class B stock

?



(13,818)



?







(13,818)



?




Tax expense of gain on sale of Visa class B stock

?



2,902



?







2,902



?




Loss on FHLB debt extinguishment and related hedge terminations

12,295



13,316



?







25,611



?




Tax benefit of loss on FHLB debt extinguishment and related hedge terminations

(2,582)



(2,796)



?







(5,378)



?




Branch consolidation costs

10,483



?



?







18,745



4,505




Tax benefit of branch consolidation costs

(2,201)



?



?







(3,936)



(946)




Service charge refunds

?



3,780



4,279







3,780



4,279




Tax benefit of service charge refunds

?



(794)



(899)







(794)



(899)




Operating net income available to common stockholders (non-GAAP)

$

91,864



$

85,466



$

96,562



7.5



(4.9)



$

313,985



$

386,147



(18.7)


















Operating earnings per diluted common share:
















Earnings per diluted common share

$

0.22



$

0.25



$

0.29







$

0.85



$

1.16




COVID-19 expense

0.01



0.01



?







0.03



?




Tax benefit of COVID-19 expense

?



?



?







(0.01)



?




Gain on sale of Visa class B stock

?



(0.04)



?







(0.04)



?




Tax expense of gain on sale of Visa class B stock

?



0.01



?







0.01



?




Loss on FHLB debt extinguishment and related hedge terminations

0.04



0.04



?







0.08



?




Tax benefit of loss on FHLB debt extinguishment and related hedge terminations

(0.01)



(0.01)



?







(0.02)



?




Branch consolidation costs

0.03



?



?







0.06



0.01




Tax benefit of branch consolidation costs

(0.01)



?



?







(0.01)



?




Service charge refunds

?



0.01



0.01







0.01



0.01




Tax benefit of service charge refunds

?



?



?







?



?




Operating earnings per diluted common share (non-GAAP)

$

0.28



$

0.26



$

0.30



7.7



(6.7)



$

0.96



$

1.18



(18.6)



F.N.B. CORPORATION AND SUBSIDIARIES




(Unaudited)

















For the Twelve Months Ended
December 31,


4Q20


3Q20


4Q19


2020


2019

Return on average tangible equity:










(Dollars in thousands)










Net income (annualized)

$

287,241



$

329,305



$

377,668



$

286,006



$

387,249


Amortization of intangibles, net of tax (annualized)

10,499



10,495



11,304



10,556



11,192


Tangible net income (annualized) (non-GAAP)

$

297,740



$

339,800



$

388,972



$

296,562



$

398,441












Average total stockholders' equity

$

4,946,549



$

4,915,933



$

4,851,489



$

4,904,300



$

4,757,465


Less:  Average intangible assets (1)

(2,318,048)



(2,321,352)



(2,330,977)



(2,322,981)



(2,331,630)


Average tangible stockholders' equity (non-GAAP)

$

2,628,501



$

2,594,581



$

2,520,512



$

2,581,319



$

2,425,835












Return on average tangible equity (non-GAAP)

11.33

%


13.10

%


15.43

%


11.49

%


16.42

%

Return on average tangible common equity:










(Dollars in thousands)










Net income available to common stockholders (annualized)

$

279,244



$

321,307



$

369,688



$

277,965



$

379,208


Amortization of intangibles, net of tax (annualized)

10,499



10,495



11,304



10,556



11,192


Tangible net income available to common stockholders (annualized) (non-GAAP)

$

289,743



$

331,802



$

380,992



$

288,521



$

390,400












Average total stockholders' equity

$

4,946,549



$

4,915,933



$

4,851,489



$

4,904,300



$

4,757,465


Less:  Average preferred stockholders' equity

(106,882)



(106,882)



(106,882)



(106,882)



(106,882)


Less:  Average intangible assets (1)

(2,318,048)



(2,321,352)



(2,330,977)



(2,322,981)



(2,331,630)


Average tangible common equity (non-GAAP)

$

2,521,619



$

2,487,699



$

2,413,630



$

2,474,437



$

2,318,953












Return on average tangible common equity
(non-GAAP)

11.49

%


13.34

%


15.79

%


11.66

%


16.84

%

Operating return on average tangible common equity:










(Dollars in thousands)










Operating net income available to common stockholders (annualized)

$

365,459










Amortization of intangibles, net of tax (annualized)

10,499










Tangible operating net income available to common stockholders (annualized) (non-GAAP)

$

375,958




















Average total stockholders' equity

$

4,946,549










Less: Average preferred stockholders' equity

(106,882)










Less: Average intangible assets (1)

(2,318,048)










Average tangible common equity (non-GAAP)

$

2,521,619




















Operating return on average tangible common equity (non-GAAP)

14.91

%









(1) Excludes loan servicing rights.










Return on average tangible assets:










(Dollars in thousands)










Net income (annualized)

$

287,241



$

329,305



$

377,668



$

286,006



$

387,249


Amortization of intangibles, net of tax (annualized)

10,499



10,495



11,304



10,556



11,192


Tangible net income (annualized) (non-GAAP)

$

297,740



$

339,800



$

388,972



$

296,562



$

398,441












Average total assets

$

37,469,191



$

37,466,706



$

34,401,114



$

36,607,430



$

33,850,763


Less:  Average intangible assets (1)

(2,318,048)



(2,321,352)



(2,330,977)



(2,322,981)



(2,331,630)


Average tangible assets (non-GAAP)

$

35,151,143



$

35,145,354



$

32,070,137



$

34,284,449



$

31,519,133












Return on average tangible assets (non-GAAP)

0.85

%


0.97

%


1.21

%


0.87

%


1.26

%

(1) Excludes loan servicing rights.


























































 

F.N.B. CORPORATION AND SUBSIDIARIES



(Unaudited)













4Q20


3Q20


4Q19

Tangible book value per common share:






(Dollars in thousands, except per share data)






Total stockholders' equity

$

4,958,903



$

4,951,059



$

4,883,198


Less:  Preferred stockholders' equity

(106,882)



(106,882)



(106,882)


Less:  Intangible assets (1)

(2,316,527)



(2,319,689)



(2,329,545)


Tangible common equity (non-GAAP)

$

2,535,494



$

2,524,488



$

2,446,771








Common shares outstanding

321,629,529



323,212,398



325,014,560








Tangible book value per common share (non-GAAP)

$

7.88



$

7.81



$

7.53


Tangible equity / tangible assets (period end):






(Dollars in thousands)






Total stockholders' equity

$

4,958,903



$

4,951,059



$

4,883,198


Less:  Intangible assets (1)

(2,316,527)



(2,319,689)



(2,329,545)


Tangible equity (non-GAAP)

$

2,642,376



$

2,631,370



$

2,553,653








Total assets

$

37,354,351



$

37,440,672



$

34,615,016


Less:  Intangible assets (1)

(2,316,527)



(2,319,689)



(2,329,545)


Tangible assets (non-GAAP)

$

35,037,824



$

35,120,983



$

32,285,471








Tangible equity / tangible assets (period end) (non-GAAP)

7.54

%


7.49

%


7.91

%

Tangible common equity / tangible assets (period end):






(Dollars in thousands)






Total stockholders' equity

$

4,958,903



$

4,951,059



$

4,883,198


Less:  Preferred stockholders' equity

(106,882)



(106,882)



(106,882)


Less:  Intangible assets (1)

(2,316,527)



(2,319,689)



(2,329,545)


Tangible common equity (non-GAAP)

$

2,535,494



$

2,524,488



$

2,446,771








Total assets

$

37,354,351



$

37,440,672



$

34,615,016


Less:  Intangible assets (1)

(2,316,527)



(2,319,689)



(2,329,545)


Tangible assets (non-GAAP)

$

35,037,824



$

35,120,983



$

32,285,471








Tangible common equity / tangible assets (period end) (non-GAAP)

7.24

%


7.19

%


7.58

%

(1) Excludes loan servicing rights.







 

F.N.B. CORPORATION AND SUBSIDIARIES




(Unaudited)





4Q20


3Q20

Allowance for credit losses / loans and leases, excluding PPP loans (period-end):




(Dollars in thousands)




ACL - loans

$

363,107



$

372,970


Loans and leases

$

25,458,645



$

25,688,502


Less: PPP loans outstanding

(2,158,452)



(2,534,136)


Loans and leases, excluding PPP loans (non-GAAP)

$

23,300,193



$

23,154,366


ACL loans / loans and leases, excluding PPP loans (non-GAAP)

1.56

%


1.61

%

 

Non-performing loans / loans and leases, excluding PPP loans:




(Dollars in thousands)




Non-performing loans

$

170,289



$

177,751


Loans and leases

$

25,458,645



$

25,688,502


Less:  PPP loans outstanding

(2,158,452)



(2,534,136)


Loans and leases, excluding PPP loans (non-GAAP)

$

23,300,193



$

23,154,366


Non-performing loans / loans and leases, excluding PPP loans (non-GAAP)

0.73

%


0.77

%

 

Non-performing loans + 90 days past due + OREO / loans and leases + OREO, excluding PPP loans:




(Dollars in thousands)




Non-performing loans + 90 days past due + OREO

$

196,675



$

216,457


Loans and leases

$

25,458,645



$

25,688,502


Plus: OREO

10,420



20,319


Less: PPP loans outstanding

(2,158,452)



(2,534,136)


Loans and leases + OREO, excluding PPP loans (non-GAAP)

$

23,310,613



$

23,174,685


Non-performing loans + 90 days past due + OREO / loans and leases + OREO, excluding PPP loans (non-GAAP)

0.84

%


0.93

%

 

Net loan charge-offs (annualized) / average loans and leases, excluding PPP loans:




(Dollars in thousands)




Net loan charge-offs (annualized)

$

104,947



$

76,605


Average loans and leases

$

25,655,784



$

26,063,431


Less: Average PPP loans outstanding

(2,463,995)



(2,509,758)


Average loans and leases, excluding PPP loans (non-GAAP)

$

23,191,789



$

23,553,673


Net loan charge-offs (annualized) / average loans and leases, excluding PPP loans (non-GAAP)

0.45

%


0.32

%

 

Past due and non-accrual loans / loans and leases, excluding PPP loans:




(Dollars in thousands)




Past due and non-accrual loans

$

258,739



$

274,314


Loans and leases

$

25,458,645



$

25,688,502


Less: PPP loans outstanding

(2,158,452)



(2,534,136)


Loans and leases, excluding PPP loans (non-GAAP)

$

23,300,193



$

23,154,366


Past due and non-accrual loans / loans and leases, excluding PPP loans (non-GAAP)

1.11

%


1.18

%

 

F.N.B. CORPORATION AND SUBSIDIARIES
(Unaudited)












For the Twelve Months Ended
December 31,


4Q20


3Q20


4Q19


2020


2019















KEY PERFORMANCE INDICATORS






Pre-provision net revenue / average tangible common equity: 









(Dollars in thousands)










Net interest income

$

234,392



$

227,098



$

226,437



$

922,082



$

917,239


Non-interest income

68,364



80,038



74,041



294,556



294,266


Less: Non-interest expense

(199,316)



(180,209)



(177,365)



(750,349)



(696,128)


Pre-provision net revenue (as reported)

$

103,440



$

126,927



$

123,113



$

466,289



$

515,377


Pre-provision net revenue (as reported) (annualized)

$

411,513



$

504,948



$

488,437



$

466,289



$

515,377


Adjustments:










Add: Branch consolidation costs (non-interest income)

?



?



?



?



1,722


Add:  Service charge refunds (non-interest income)

?



3,780



4,279



3,780



4,279


Less: Gain on sale of Visa class B stock (non-interest income)

?



(13,818)



?



(13,818)



?


Add: Loss on FHLB debt extinguishment and related hedge terminations (non-interest income)

12,295



13,316



?



25,611



?


Add: COVID - 19 expense (non-interest expense)

4,654



2,671



?



11,276



?


Add: Branch consolidation costs (non-interest expense)

10,483



?



?



18,745



2,783


Add:  Tax credit-related impairment project (non-interest expense)

?



?



?



4,101



3,213


Pre-provision net revenue (operating) (non-GAAP)

$

130,872



$

132,876



$

127,392



$

515,984



$

527,374


Pre-provision net revenue (operating) (annualized) (non-GAAP)

$

520,644



$

528,614



$

505,414



$

515,984



$

527,374


Average total shareholders' equity

$

4,946,549



$

4,915,933



$

4,851,489



$

4,904,300



$

4,757,465


Less: Average preferred shareholders' equity

(106,882)



(106,882)



(106,882)



(106,882)



(106,882)


Less: Average intangible assets (1)

(2,318,048)



(2,321,352)



(2,330,977)



(2,322,981)



(2,331,630)


Average tangible common equity (non-GAAP)

$

2,521,619



$

2,487,699



$

2,413,630



$

2,474,437



$

2,318,953


Pre-provision net revenue (reported) /
average tangible common equity (non-GAAP)

16.32

%


20.30

%


20.24

%


18.84

%


22.22

%

Pre-provision net revenue (operating) /
average tangible common equity (non-GAAP)

20.65

%


21.25

%


20.94

%


20.85

%


22.74

%











Efficiency ratio (FTE):










(Dollars in thousands)










Total non-interest expense

$

199,316



$

180,209



$

177,365



$

750,349



$

696,128


Less:  Amortization of intangibles

(3,341)



(3,339)



(3,607)



(13,362)



(14,167)


Less:  OREO expense

(1,087)



(1,061)



(1,198)



(4,434)



(4,652)


Less: COVID-19 expense

(4,654)



(2,671)



?



(11,276)



?


Less:  Branch consolidation costs

(10,483)



?



?



(18,745)



(2,783)


Less: Tax credit-related project impairment

?



?



?



(4,101)



(3,213)


Adjusted non-interest expense

$

179,751



$

173,138



$

172,560



$

698,431



$

671,313












Net interest income

$

234,392



$

227,098



$

226,437



$

922,082



$

917,239


Taxable equivalent adjustment

3,000



3,018



3,474



12,470



14,121


Non-interest income

68,364



80,038



74,041



294,556



294,266


Less:  Net securities gains

(20)



(112)



(35)



(282)



(70)


Less: Gain on sale of Visa class B stock

?



(13,818)



?



(13,818)



?


Add: Loss on FHLB debt extinguishment and related hedge terminations

12,295



13,316



?



25,611



?


Add:  Branch consolidation costs

?



?



?



?



1,722


Add: Service charge refunds

?



3,780



4,279



3,780



4,279


Adjusted net interest income (FTE) + non-interest income

$

318,031



$

313,320



$

308,196



$

1,244,399



$

1,231,557












Efficiency ratio (FTE) (non-GAAP)

56.52

%


55.26

%


55.99

%


56.13

%


54.51

%

(1) Excludes loan servicing rights.










 

SOURCE F.N.B. Corporation


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