8-K: F.N.B. Corporation Reports Strong Fourth Quarter and Full Year 2024 Earnings, Tangible Book Value per Share Up 11%

F.N.B. Corporation announced a strong fourth quarter and full year 2024, highlighted by an 11% increase in tangible book value per share and a record tangible common equity ratio of 8.2%.

Summary

• F.N.B. Corporation reported net income available to common stockholders of $109.9 million, or $0.30 per diluted common share, for the fourth quarter of 2024.
• This compares to $48.7 million, or $0.13 per diluted common share, in the fourth quarter of 2023.
• Operating earnings per diluted common share (non-GAAP) for the fourth quarter of 2024 was $0.38, excluding $0.08 per share of significant items.
• For the full year 2024, net income available to common stockholders was $459.3 million, or $1.27 per diluted common share.
• Full-year 2023 net income was $476.8 million, or $1.31 per diluted common share.
• Full-year 2024 operating earnings per diluted common share (non-GAAP) was $1.39, excluding $0.12 per diluted common share of significant items.
• The company achieved a record tangible common equity ratio (non-GAAP) of 8.2% and tangible book value per share (non-GAAP) grew 11% year-over-year to $10.49.
• FNB experienced year-over-year loan growth of 5.0% and deposit growth of 6.9%.
• The company also achieved record full-year operating non-interest income (non-GAAP) of $350 million.
• Total delinquencies were at 0.83% and net charge-offs were at 0.19% for the full year.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth in key areas like tangible book value and non-interest income, despite some challenges in net interest margin. The management's comments are optimistic, and the company's performance is generally better than expected.

Positives

• Tangible book value per share grew by 11% year-over-year, reaching a record $10.49.
• The company achieved a record tangible common equity ratio of 8.2%.
• FNB experienced strong loan growth of 5.0% and deposit growth of 6.9% year-over-year.
• Full-year operating non-interest income reached a record $350 million.
• The CET1 regulatory capital ratio was a strong 10.6% at the end of 2024.
• The company's credit metrics remained solid with total delinquencies at 0.83% and net charge-offs at 0.19% for the full year.
• The company improved its loan-to-deposit ratio by over 500 basis points from its peak in 2024.
• The company expects strong revenue growth and a return to positive operating leverage in 2025.

Negatives

• Net interest income decreased slightly by 0.3% from the prior quarter due to lower earning asset yields.
• Non-interest income decreased by 43.2% from the prior quarter, primarily due to a $34 million realized loss on securities restructuring.
• Operating non-interest expense increased by 13.4% compared to the same quarter last year.
• The net interest margin (FTE) decreased 17 basis points year-over-year to 3.04%.
• The ratio of non-performing loans and OREO to total loans and OREO increased 14 basis points year-over-year to 0.48%.
• Total delinquency increased 13 basis points year-over-year to 0.83%.

Risks

• The company's business, financial results, and balance sheet values are affected by economic and political circumstances.
• The company faces risks related to competition, technological changes, and adverse industry events.
• The company's ability to take certain capital actions is subject to meeting minimum capital levels.
• Legal, regulatory, and accounting developments could impact the company's operations and growth.
• The company is exposed to risks related to cyber-attacks and security breaches.
• Increased funding costs and market volatility could impact the company's financial performance.
• The company's forward-looking statements are subject to various risks and uncertainties.

Future Outlook

FNB expects strong revenue growth and a return to positive operating leverage in 2025.

Management Comments

• FNB further strengthened its liquidity and capital position, improving the loan-to-deposit ratio over 500 basis points from the peak in 2024 through strong deposit originations and achieving higher capital ratios with a record CET1 ratio of 10.6%, said F.N.B. Corporation Chairman, President and Chief Executive Officer, Vincent J. Delie, Jr.
• Tangible book value per share (non-GAAP) grew 11% year-over-year, to a record $10.49 and operating return on average tangible common equity (non-GAAP) equaled 14.5% for the full year.
• FNB benefited from its geographic footprint, investments in technology, strong balance sheet and high caliber front-line bankers to generate year-over-year loan growth of 5.0% and robust deposit growth of 6.9%.
• We also achieved record full-year operating non-interest income (non-GAAP) of $350 million, demonstrating the impact of our diversified business model and robust suite of products and services.
• Our credit metrics ended the year at solid levels in a changing economic environment with total delinquencies at 0.83% and net charge-offs at 0.19% for the full year.
• These results highlight the many significant milestones and records FNB achieved to drive shareholder value in 2024.
• We will continue to build on our momentum in 2025 with our expectation for strong revenue growth and a return to positive operating leverage.

Industry Context

The results reflect a challenging environment for banks with interest rate cuts impacting net interest income, but FNB has managed to grow loans and deposits and maintain solid credit metrics. The company's focus on technology and a diversified business model appears to be paying off.

Comparison to Industry Standards

• FNB's tangible book value per share growth of 11% year-over-year is strong compared to many regional banks, such as KeyCorp (KEY) which reported a 1.5% increase in tangible book value per share in their most recent quarter.
• The company's CET1 ratio of 10.6% is also solid, exceeding the regulatory minimum and is comparable to peers like PNC Financial Services (PNC) which reported a CET1 ratio of 10.1% in their latest results.
• FNB's loan growth of 5.0% and deposit growth of 6.9% are also competitive, outperforming some regional banks that have seen slower growth or even declines in these areas.
• However, the net interest margin compression of 17 basis points year-over-year is a common trend in the industry due to the Federal Reserve's interest rate cuts, which is also seen in the results of banks like Citizens Financial Group (CFG) which reported a similar decline in net interest margin.
• The company's operating non-interest income of $350 million is a positive sign of diversification, which is a key focus for many banks to reduce reliance on net interest income.

Stakeholder Impact

• Shareholders will benefit from the strong growth in tangible book value per share and the company's positive outlook.
• Employees may benefit from the company's continued growth and investments in risk management infrastructure.
• Customers will benefit from the company's diversified products and services and strong balance sheet.
• Creditors will be reassured by the company's strong capital ratios and liquidity position.

Next Steps

• The company will continue to build on its momentum in 2025 with an expectation for strong revenue growth and a return to positive operating leverage.
• A conference call will be held on January 22, 2025, to discuss the financial results.

Key Dates

Keywords

earnings, financial results, tangible book value, net income, loan growth, deposit growth, capital ratios, non-interest income, credit metrics, operating earnings, CET1 ratio, net interest margin, delinquencies, charge-offs, senior notes