10-Q: F.N.B. Corp. Reports Record Q3 Earnings, Strong Capital

F.N.B. Corporation announced record diluted earnings per common share of $0.41 and record total revenue of $457 million for the third quarter ended September 30, 2025.

Summary

• Net income available to common shareholders for Q3 2025 increased 35.8% to $149.5 million, or $0.41 per diluted common share, compared to $110.1 million, or $0.30 per diluted common share, for Q3 2024.
• Year-to-date net income available to common shareholders rose 13.5% to $396.7 million, or $1.09 per diluted common share, compared to $349.5 million, or $0.96 per diluted common share, for the same period in 2024.
• Net interest income totaled a record $359.3 million in Q3 2025, an 11.1% increase from Q3 2024, driven by growth in earning assets and lower interest-bearing deposit costs.
• The net interest margin (FTE, non-GAAP) expanded by 17 basis points year-over-year to 3.25% in Q3 2025.
• Total non-interest income reached a record $98.2 million in Q3 2025, up 9.5% from Q3 2024, benefiting from diversified revenue streams including mortgage banking, capital markets, and wealth management.
• Non-interest expense decreased 2.4% to $243.5 million in Q3 2025 compared to Q3 2024, with operating non-interest expense (non-GAAP) increasing 5.0% when excluding significant items.
• Total assets grew 2.6% to $49.889 billion at September 30, 2025, from $48.625 billion at December 31, 2024.
• Total deposits increased 3.6% to $38.441 billion at September 30, 2025, from $37.107 billion at December 31, 2024, reflecting organic growth.
• Average loans and leases increased 3.0% year-over-year to $34.8 billion in Q3 2025, primarily due to consumer loan growth, particularly residential mortgages.
• Non-performing assets decreased by $34.5 million, or 21.0%, to $127.9 million at September 30, 2025, from $162.4 million at December 31, 2024.
• The CET1 capital ratio reached a record 11.1% at September 30, 2025, up from 10.4% a year prior, and tangible book value per common share (non-GAAP) grew 11.1% year-over-year to $11.48.
• The Allowance for Credit Losses (ACL) on loans and leases was $437.3 million, an increase of $14.5 million, or 3.4%, from December 31, 2024, with the ACL coverage ratio remaining stable at 1.25%.

Sentiment

Score: 8

Explanation: The filing reports record earnings, strong revenue growth, margin expansion, and robust capital levels, alongside improving asset quality metrics. While there are increases in provision for credit losses and net charge-offs, these are framed within proactive risk management and stable coverage ratios. The outlook emphasizes continued strategic management and strong liquidity, indicating a very positive overall financial health and operational efficiency.

Positives

• Record diluted earnings per common share of $0.41 in Q3 2025, a 36.7% increase year-over-year.
• Record total revenue of $457 million in Q3 2025, driven by strong net interest income and non-interest income.
• Net interest income increased 11.1% year-over-year in Q3 2025, reflecting effective asset and liability management.
• Net interest margin (FTE) expanded by 17 basis points year-over-year to 3.25% in Q3 2025.
• Non-interest income reached a record $98.2 million in Q3 2025, demonstrating the strength of the diversified business model.
• Non-interest expense decreased 2.4% year-over-year in Q3 2025, contributing to improved profitability.
• Non-performing assets decreased by 21.0% from December 31, 2024, indicating strong asset quality management.
• Criticized loans declined 7.3% on a linked-quarter basis, further supporting asset quality.
• CET1 capital ratio reached a record 11.1%, and tangible common equity to tangible assets (non-GAAP) was a record 8.7%, highlighting robust capital strength.
• Tangible book value per common share (non-GAAP) grew 11.1% year-over-year to $11.48.
• Average loans and leases increased 3.0% year-over-year, with strong growth in consumer residential mortgages.
• Average deposits increased 6.4% year-over-year, reflecting successful organic growth strategies.
• Efficiency ratio (non-GAAP) of 52% in Q3 2025 is in the top-quartile on a peer relative basis.

Negatives

• Provision for credit losses increased to $24.0 million in Q3 2025 from $23.4 million in Q3 2024, and to $67.1 million year-to-date 2025 from $57.5 million year-to-date 2024.
• Net charge-offs increased to $54.0 million year-to-date 2025, or 0.21% annualized of average total loans, compared to $42.1 million, or 0.17% annualized, for the same period in 2024.
• Loan modifications to borrowers experiencing financial difficulties increased in Q3 2025 and YTD 2025 compared to 2024, with defaults on modified loans also increasing year-to-date 2025 to $13.8 million.
• Bank owned life insurance income decreased $2.3 million, or 35.0%, in Q3 2025 due to lower life insurance claims.
• Dividends on non-marketable equity securities decreased $1.8 million, or 9.2%, year-to-date 2025, reflecting lower FHLB dividends due to a lower average balance of FHLB stock.

Risks

• Credit risk associated with the substantial amount of commercial loans and leases in the loan portfolio.
• Volatility of the mortgage banking business.
• Changes in market interest rates, the U.S. federal government shutdown, and unpredictability of monetary, tax, and other policies of government agencies, including tariffs or trade wars.
• Impact of changes in interest rates on the value of investment securities portfolios.
• Changes in the ability to obtain liquidity as and when needed, including due to adverse changes to credit ratings.
• Risk associated with uninsured deposit account balances.
• Regulatory limits on the ability to receive dividends from subsidiaries and pay dividends to shareholders.
• Ability to recruit and retain qualified banking professionals.
• Financial soundness of other financial institutions and the impact of volatility in the banking sector.
• Changes and instability in economic conditions and financial markets, including contraction, downturn, or international conflict.
• Ability to continue to invest in technological improvements.
• Any interruption in or breach in security of information systems, or other cybersecurity risks.
• Risks associated with reliance on third-party vendors and artificial intelligence.
• Risks associated with the use of models, estimations, and assumptions in the business.
• Effects of adverse weather events and public health emergencies.
• Risks associated with acquiring other banks and financial services businesses, including integration into existing operations.
• Extensive federal and state regulations, supervision, and examination, and potential expenses associated with compliance.
• Ability to comply with consent orders entered into by FNBPA with the DOJ and the North Carolina State Department of Justice, and related costs and potential reputational harm.
• Changes in federal, state, or local tax rules and regulations or interpretations, or accounting policies, standards, and interpretations.
• Effects of climate change and related legislative and regulatory initiatives.
• Reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory, and compliance risk resulting from developments related to any of the above risks.

Future Outlook

Management intends to continue managing its interest rate risk position to a more neutral stance, anticipating lower short-term interest rates. The company expects to reclassify $3.2 million ($2.5 million net of tax) in net derivative gains from AOCI within the next 12 months. Stress tests indicate that regulatory capital ratios will remain above requirements and adequate liquidity will be maintained even under severe conditions. The company plans to continue assessing and investing in risk management practices for sustained growth and to meet heightened regulatory expectations. New accounting standards (ASU 2025-06 and ASU 2024-03) will be evaluated for future impact, with provisions of the 'One Big Beautiful Bill' becoming effective after December 31, 2025. New operating lease agreements for administrative office space are expected to commence in 2026, adding approximately $5.0 million in right-of-use assets and liabilities.

Management Comments

• Reported record earnings per diluted common share of $0.41, an increase of 14% from the prior quarter, with record total revenue of $457 million principally driven by growth in net interest income, margin expansion and record non-interest income.
• Growing profitability further strengthened capital levels to all-time highs with a CET1 regulatory capital ratio of 11.1%, tangible book value per common share (non-GAAP) growth of 11% year-over-year and a return on tangible common equity ratio (non-GAAP) of 15%.
• Performance is supported by consistent underwriting standards and proactive credit risk management actions, which led to continued solid credit results for the quarter including a 7.3% decline in criticized loans from the prior quarter.
• Cash levels remain appropriate given the current market environment.
• Sufficient liquidity is available to meet normal operating and contingency funding cash needs for the next twelve months and thereafter for the foreseeable future.
• Management continues to be proactive in managing our interest rate risk (IRR) position with the intention to manage to a more neutral position given the current market expectations for lower short-term interest rates.

Industry Context

The company's performance reflects resilience in a dynamic banking sector, characterized by ongoing interest rate volatility and macroeconomic uncertainty. Its diversified financial services model, encompassing commercial banking, consumer banking, and wealth management, has enabled record non-interest income generation. The focus on organic deposit growth and relationship-based banking aligns with broader industry trends emphasizing stable funding sources. Proactive credit risk management and capital strengthening are critical in an environment where the financial soundness of other institutions and potential economic contractions remain concerns. The company's efforts to manage interest rate sensitivity are pertinent given market expectations for lower short-term interest rates.

Comparison to Industry Standards

• The efficiency ratio (non-GAAP) of 52% in Q3 2025 is in the top-quartile on a peer relative basis, indicating strong operational efficiency compared to competitors.
• The municipal bond portfolio, with a carrying amount of $1.0 billion, is highly rated with an average rating of AA and 98% rated A or better, suggesting superior credit quality within this segment compared to general market averages.
• The ACL as a percentage of non-performing loans increased to 350% as of September 30, 2025, from 265% at December 31, 2024, demonstrating a robust and improving coverage of potential credit losses.
• Approximately 77% of all deposits were insured by the FDIC or collateralized at September 30, 2025, consistent with prior periods, indicating a strong and stable deposit base relative to industry concerns about uninsured deposits.
• The Uninsured Deposit Coverage Ratio improved from December 31, 2024, due to management actions, suggesting a proactive approach to liquidity risk management that may exceed some industry peers.

Legal Proceedings

• On February 5, 2024, the company announced a settlement with the U.S. Department of Justice (DOJ) and the State of North Carolina to resolve fair lending concerns related to mortgage lending activities in the Winston-Salem and Charlotte, North Carolina markets, which began prior to Yadkin's merger with FNBPA in March 2017.
• The settlement includes a commitment to provide $11.75 million in subsidies on mortgages and home equity loans originated in the Charlotte and Winston-Salem markets, starting in 2024, until the full amount has been deployed.
• No civil money penalties were levied against FNBPA as part of this settlement.

Related Party Transactions

• An operating lease exists with a related party, which is accounted for consistently with other leases and represents a variable interest entity (VIE) for which the company is not the primary beneficiary.
• FNBPA made a construction loan to the same related party.
• The company has wholly-owned trusts whose assets, liabilities, equity, income, and expenses are not included in the Consolidated Financial Statements; these trusts issue Trust Preferred Securities (TPS) from which proceeds are invested in the company's junior subordinated debentures.

Stakeholder Impact

• Shareholders benefit from record earnings, increased EPS, strong capital ratios, and growth in tangible book value, potentially leading to increased share price and long-term value.
• Customers in the Charlotte and Winston-Salem, North Carolina markets benefit from $11.75 million in mortgage and home equity loan subsidies as part of a legal settlement.
• Employees benefit from strategic hiring and continued investments in risk management infrastructure, leading to higher salaries and employee benefits.
• Regulators see strong compliance with capital requirements and proactive risk management, although the DOJ settlement highlights past fair lending concerns.
• Creditors and debt holders benefit from the company's strong capital base and liquidity position, enhancing the safety and soundness of their investments.

Next Steps

• Evaluate the effect of ASU 2025-06, 'Intangibles Goodwill and Other Internal-Use Software: Targeted Improvements to the Accounting of Internal-Use Software', for adoption in annual periods beginning after December 15, 2027.
• Evaluate the effect of ASU 2024-03, 'Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses', for adoption in annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.
• Continue to provide $11.75 million in subsidies on mortgages and home equity loans originated in the Charlotte and Winston-Salem, North Carolina markets, beginning in 2024, until the full amount has been deployed, as part of the DOJ settlement.
• Monitor the future impact of provisions from the 'One Big Beautiful Bill' that are effective for tax years beginning after December 31, 2025.
• Commence new operating lease agreements for administrative office space in 2026, which are expected to add approximately $5.0 million in right-of-use assets and $5.0 million in other liabilities.
• Continue to assess risk management practices and make investments to position for continued growth and heightened regulatory risk management expectations.
• Continue with the $300 million stock purchase program, with $103.7 million remaining for repurchase.

Key Dates

Recommendation

F.N.B. Corporation's Q3 2025 results demonstrate exceptional financial health and operational efficiency, marked by record diluted EPS and total revenue. The company achieved significant year-over-year growth in net interest income and expanded its net interest margin, indicating effective interest rate management. Capital levels are at all-time highs, and tangible book value per common share saw substantial growth, reflecting a robust balance sheet. Asset quality metrics improved with a notable decrease in non-performing assets and stable credit loss coverage, despite a managed increase in provision for credit losses. The diversified business model continues to drive non-interest income growth, and the company's efficiency ratio is top-quartile. Management's proactive approach to risk and liquidity management, coupled with a clear strategy for continued growth, positions F.N.B. Corporation as a compelling investment opportunity.

Keywords

Banking, Financial Services, Commercial Banking, Consumer Banking, Wealth Management, SEC Filing, 10-Q, Earnings Report, Net Interest Income, Loan Growth, Deposit Growth, Capital Ratios, Asset Quality, Mortgage Banking, Credit Risk, Interest Rate Risk, FNB Corporation