F.N.B. Corp (FNB) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
F.N.B. Corporation’s FNB second-quarter adjusted earnings per share of 39 cents beat the Zacks Consensus Estimate of 38 cents. The bottom line reflects a rise of 30% from the prior-year quarter.
The results were primarily aided by a rise in net interest income (NII) and solid loan demand. Higher interest rates supported the growth in margins. However, increased expenses and rising provisions were the undermining factors.
After considering significant items, the net income available to common stockholders was $140.4 million, up from $107.1 million in the year-ago quarter. Our estimate for the metric was $130 million.
Revenues Improve, Operating Expenses Rise
Net revenues (GAAP basis) were $409.6 million, up 21.9% from the year-earlier quarter. The top line also beat the Zacks Consensus Estimate of $404.2 million.
Quarterly NII was $329.2 million, up 29.8% from the year-earlier quarter. Our estimate for NII was $327.8 million.
The net interest margin (FTE basis) (non-GAAP) expanded 61 basis points (bps) year over year to 3.37%.
Non-interest income was $80.3 million, down 2.2% year over year. The fall was primarily due to lower mortgage banking operations and capital markets income. Our estimate for the metric was $75.2 million.
Non-interest expenses were $212 million, up 9.9% year over year. Our estimate for the same was $208 million. Operating non-interest expenses totaled $211.8 million, rising 11%.
As of Jun 30, 2023, the common equity Tier 1 (CET1) ratio was 10% compared with 9.7% in the year-earlier quarter.
At the end of the second quarter, average loans and leases were $31.04 billion, up 2.1% sequentially. Average deposits totaled $33.82 billion, down 1.1% from the previous quarter.
Credit Quality Worsens
F.N.B. Corp’s provision for credit losses was $18.5 million, which increased significantly from the prior-year quarter. The ratio of non-performing loans and other real estate owned (OREO) to total loans and OREO increased 12 bps to 0.47%. Total delinquency increased 17 bps to 0.75%.
In the reported quarter, net charge-offs to total average loans were 0.11%, up 10 bps.
Share Repurchase Update
During the reported quarter, F.N.B. Corp repurchased 2,288,558 shares at a weighted average price of $10.80 per share.
Our Take
F.N.B. Corp’s solid liquidity position bodes well for the future. The company’s top line is expected to continue to benefit from its efforts to increase fee income and opportunistic acquisitions. However, given the challenging operating backdrop, the company’s asset quality is likely to remain under pressure going forward. Additionally, persistently rising expenses, owing to digitization and strategic buyouts, will likely hurt profits in the near term.
F.N.B. Corporation Price, Consensus and EPS Surprise
F.N.B. Corporation price-consensus-eps-surprise-chart | F.N.B. Corporation Quote
Currently, F.N.B. Corp carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Major Banks
Wells Fargo & Company’s WFC second-quarter 2023 earnings per share of $1.25 has outpaced the Zacks Consensus Estimate of $1.15. The figure improved 66.7% year over year.
Results of WFC have benefited from higher NII and non-interest income. Improvements in capital and profitability ratios were other positives. However, higher provisions for credit losses and rise in expenses were the undermining factors.
Citigroup Inc.’s C second-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.37 have outpaced the Zacks Consensus Estimate of $1.31.
In the second quarter, C witnessed a decline in the top line due to lower revenues in the Institutional Clients Group. Also, the higher cost of credit was a spoilsport. Nonetheless, higher revenues in the Personal Banking and Wealth Management segments were bright spots.
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