10-Q: FNB Corp Reports Strong Q2 Earnings, Record Revenue

F.N.B. Corporation announced robust second quarter 2025 results, featuring record revenue and net interest income, alongside significant improvements in asset quality and capital ratios.

Summary

• Net income available to common shareholders for Q2 2025 was $130.7 million, or $0.36 per diluted common share, up from $123.0 million ($0.34 diluted EPS) in Q2 2024.
• Year-to-date net income available to common shareholders reached $247.2 million ($0.68 diluted EPS) for Q2 2025, compared to $239.4 million ($0.66 diluted EPS) for the same period in 2024.
• Total revenue hit a record $438.2 million in Q2 2025, a 6.5% linked-quarter increase, driven by growth in net interest income and non-interest income.
• Net interest income totaled a record $347.2 million in Q2 2025, an increase of 9.9% from Q2 2024, primarily due to higher yields on earning assets and lower cost of funds.
• The net interest margin (FTE) increased 10 basis points year-over-year to 3.19% in Q2 2025.
• Non-interest income reached a record $91.0 million in Q2 2025, up 3.5% from the year-ago quarter, with capital markets income increasing 34.1% and wealth management revenue increasing 5.2%.
• Period-end total loans and leases increased by $922.3 million, or 2.7%, compared to June 30, 2024, reaching $34.679 billion.
• Period-end total deposits increased by $2.8 billion, or 7.9%, compared to June 30, 2024, reaching $37.748 billion.
• Non-performing loans declined by $44 million, or 27.5%, from the prior quarter, with the ratio of non-performing loans plus OREO to total loans and leases plus OREO decreasing 14 basis points to 0.34%.
• The Allowance for Credit Losses (ACL) on loans and leases was $432.1 million, with the ACL coverage ratio remaining stable at 1.25%.

Sentiment

Score: 8

Explanation: The filing indicates strong financial performance with record revenue and net interest income, improved asset quality metrics, and robust capital levels. While provision for credit losses and non-interest expenses increased, the overall trend points to healthy growth and effective risk management.

Positives

• Record revenue of $438.2 million in Q2 2025, a 6.5% linked-quarter increase.
• Record net interest income of $347.2 million in Q2 2025, up 9.9% year-over-year.
• Net interest margin (FTE) improved by 10 basis points year-over-year to 3.19% in Q2 2025.
• Non-interest income reached a record $91.0 million in Q2 2025, driven by strong capital markets income (up 34.1%) and wealth management revenue (up 5.2%).
• Strong balance sheet growth with linked-quarter annualized average loan growth of 5.3% and deposit growth of 1.7%.
• Non-performing loans declined by $44 million, or 27.5%, from the prior quarter, indicating strong credit quality management.
• The ACL as a percentage of non-performing loans increased to 370.72% as of June 30, 2025, up from 265% at December 31, 2024, demonstrating improved coverage.
• Record capital levels with CET1 capital ratio at 10.8% and tangible common equity to tangible assets ratio (non-GAAP) at 8.47%.
• Tangible book value per common share (non-GAAP) increased by $1.26, or 12.8%, year-over-year to $11.14.
• Unrealized losses on AFS securities reduced tangible book value per common share by $0.26 as of June 30, 2025, a significant improvement from a $0.67 reduction as of June 30, 2024.

Negatives

• Provision for credit losses increased to $25.6 million in Q2 2025, up from $20.2 million in Q2 2024, reflecting higher net charge-offs.
• Net charge-offs annualized of total average loans increased to 0.25% in Q2 2025, compared to 0.09% in Q2 2024.
• Non-interest expense increased by $19.6 million, or 8.7%, in Q2 2025, driven by higher salaries and employee benefits, technology investments, and costs related to the Community Uplift program.
• Insurance commissions and fees decreased by $1.8 million, or 14.3%, for the six months ended June 30, 2025, primarily due to lower contingent fees.
• Mortgage banking operations income decreased by $1.6 million, or 10.6%, for the six months ended June 30, 2025, due to net hedging impacts.
• Dividends on non-marketable equity securities decreased by $1.4 million, or 10.4%, for the six months ended June 30, 2025, reflecting 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 and the unpredictability of monetary, tax, and other policies of government agencies, including tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions.
• Impact of changes in interest rates on the value of investment securities portfolios.
• Changes in the ability to obtain liquidity as and when needed to fund obligations, including as a result of 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 a contraction of economic activity, economic downturn or uncertainty, and international conflict.
• Ability to continue to invest in technological improvements as they become appropriate or necessary.
• Any interruption in or breach in security of information systems, or other cybersecurity risks.
• Risks associated with reliance on third-party vendors.
• 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 governing almost every aspect of operations, and potential expenses associated with complying with such regulations.
• Ability to comply with the 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 discussed risks.

Future Outlook

Management is proactively managing its interest rate risk position to achieve a more neutral stance, anticipating lower short-term interest rates. The company expects to continue its strategy of opportunistic access to capital markets. Stress tests indicate that regulatory capital ratios would remain above requirements and adequate funding would be available even under severe conditions, demonstrating expected ability to support customers and communities.

Management Comments

• We reported strong second quarter results, generating earnings per diluted common share of $0.36 with record revenue of $438.2 million, a 6.5% linked-quarter increase, principally driven by growth in net interest income and non-interest income.
• Our CET1 ratio of 10.8% and tangible common equity to tangible assets ratio (non-GAAP) of 8.5% were both at record levels, tangible book value per common share (non-GAAP) increased 13% year-over-year, while we still produced a solid return on tangible common equity ratio (non-GAAP) of 13.6%.
• Balance sheet growth was solid with linked-quarter annualized average loan and deposit growth of 5.3% and 1.7%, respectively, benefiting from our diverse geographic footprint.
• Our consistent underwriting standards and proactive credit risk management actions led to continued strong credit results for the quarter with non-performing loans declining $44 million, or 27.5%, from the prior quarter.
• 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.
• Management has concluded that our cash levels remain appropriate given the current market environment.
• Management believes we have sufficient liquidity available to meet our normal operating and contingency funding cash needs for the next twelve months and thereafter for the foreseeable future.

Industry Context

The company's performance reflects a strong position within the regional banking sector, demonstrating effective management of interest rate risk in a volatile environment. Its focus on organic growth in high-quality loans and relationship-based deposits aligns with broader industry trends emphasizing stable funding and diversified revenue streams. The increase in capital markets income and wealth management revenue highlights the benefits of a diversified financial services model, a strategy many regional banks are pursuing to offset traditional lending pressures. The proactive management of credit quality, evidenced by declining non-performing loans and increased ACL coverage, positions the company favorably amidst ongoing economic uncertainties.

Comparison to Industry Standards

• The company's capital levels, with a CET1 capital ratio of 10.79% and tangible common equity to tangible assets ratio of 8.47%, exceed all regulatory capital requirements and are above the minimum levels to be considered 'well-capitalized' for regulatory purposes, indicating strong financial resilience compared to industry benchmarks.
• The municipal bond portfolio, with an average rating of AA and 98% rated A or better, demonstrates a high credit quality standard for its investment securities, aligning with prudent risk management practices.
• The loan-to-deposit ratio of 92% at June 30, 2025, is within a healthy range for a financial institution, indicating effective funding of lending activities through its deposit base.
• Approximately 77% of deposits being insured by the FDIC or collateralized reflects a strong and stable deposit base, a key liquidity advantage compared to peers with higher proportions of uninsured deposits.
• The successful issuance of $500 million senior notes at a spread of 165 basis points above comparable Treasury notes indicates strong investor confidence and competitive access to capital markets.
• The company's internal liquidity metrics, such as a Liquidity Coverage Ratio of 1.5 times and Months of Cash on Hand of 13.1 months, both exceed internal policy minimums, suggesting robust liquidity management compared to industry best practices.

Legal Proceedings

• On February 5, 2024, Yadkin Bank and its successor by merger, FNBPA, reached a settlement with the DOJ and the State of North Carolina to resolve fair lending concerns related to mortgage lending activities during a four-year period in the Winston-Salem and Charlotte, North Carolina markets that began prior to Yadkin's merger with FNBPA in March 2017.
• The settlement includes FNBPA's commitment 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, continuing until the full amount has been deployed.
• The settlement was not initiated through a referral by a federal bank regulatory agency or consumer complaint, and included no civil money penalties levied against FNBPA.

Related Party Transactions

• An operating lease exists with a related party, accounted for consistently with other leases based on legally enforceable terms and conditions. This related party represents a Variable Interest Entity (VIE) for which the company is not the primary beneficiary.
• As of June 30, 2025, this related party operating lease accounts for $72.1 million in operating right-of-use assets and $103.3 million in operating lease liabilities.

Stakeholder Impact

• Shareholders: Benefited from increased net income, diluted EPS, and tangible book value per common share, alongside ongoing share repurchase program and stable dividends.
• Customers: Experienced continued loan and deposit growth, and benefited from the enhanced and expanded Community Uplift mortgage down payment assistance program.
• Employees: Impacted by strategic hiring, higher production-related compensation, and normal annual merit increases.
• Communities: Supported through tax credit investments (LIHTC, HTC, NMTC) aligned with Community Reinvestment Act initiatives, and the Community Uplift program.

Next Steps

• Continue diligent monitoring of the loan portfolio for tariff impacts and engage in active dialogue with customers.
• Evaluate appropriate levels of liquidity based on expected loan and deposit growth and other balance sheet activity.
• Proactively manage the interest rate risk (IRR) position to achieve a more neutral stance, given current market expectations for lower short-term interest rates.
• Evaluate income tax implications of the 'One Big Beautiful Bill' signed into law on July 4, 2025.

Key Dates

Recommendation

The company demonstrates exceptional financial health, marked by record revenue and net interest income, strong loan and deposit growth, and significant improvements in asset quality. Capital ratios are robust and exceed regulatory requirements, indicating a solid foundation. Proactive risk management, particularly in interest rate risk and credit quality, further enhances its stability. The consistent execution of strategic initiatives and positive outlook make it a compelling investment opportunity.

Keywords

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